Mr. Carr

Finance & Investment

Before You Swipe That Card: Do You Know What Fees You're Paying?

By Bob Carr, Chairman & CEO, Heartland Payment Systems

Every time you swipe a guest's credit card, your hotel is charged with transaction fees. Since most of your bills are likely paid by credit card, the amount you pay in these fees are substantial. Yet, do you understand what you pay and properly manage that expense?

If you are like many hoteliers, you may not drill down into credit card processing costs - first because you may not have the time, and second because the statements you receive from your payments processor are probably very confusing. If you take a good look at your statements, you will discover that fees vary wildly based on the type of card used and can reach as high as 5% on each payment.

That may be because every transaction is passing through up to 12 middlemen, each of whom tacks on its own processing fee. Then, there are the hidden fees, penalties and questionable business policies that many card processors bury in the fine print. The end result is you may be paying more per transaction than you have to.

The Merchant Bill of Rights is a set of industry standards designed to promote fair credit and debit card processing practices. The primary objective of this advocacy initiative is to educate business owners and hoteliers like you so you can effectively manage the complexity and cost of card acceptance.

First and foremost, The Merchant Bill of Rights focuses on your right to transparent business practices. Too often, business owners pay for card processing without knowing what is really happening behind the scenes. Let's drill in to some of the transparency issues The Merchant Bill of Rights targets - starting with middlemen.


A card transaction involves four entities: a bank, a card company (Visa, MasterCard, etc.), a network connection, and a processor. The processor operates the computer systems that authorize transactions and convert them into cash that is debited from the buyer's bank and credited to the seller's bank.

Surprisingly, the card processor can bring as many as 12 parties - many of whom are not necessarily needed - to the table. These can include (1) an independent contractor representing (2) a salesperson representing (3) an agent representing the bank or processor. That's just the beginning.

Then there can be (4) a referral group, (5) an accounting firm or (6) a non-processing bank. Let's not forget (7) the software company and (8) its salesperson and (9) the dealer who sold the card processing equipment.

Last up, roll in (10) the IP gateway provider, (11) its salesperson and (12) the network service provider. Had enough? Each one may be inflating the processing fee and siphoning a cut of every sale your hotel completes.

The Merchant Bill of Rights says you have a right to know how many people are involved in your payments transactions - and who they are. When more than the four required parties are involved, that's a sign you might be paying too much.

The solution is easy. Call your card processor and ask how many people are piggybacking on transactions. While some card processors will have extra parties tacking on fees, others will help you contain your costs by not involving any extra agents or contractors.


Are you confused by complex contracts and dense monthly statements? If so, you are not alone.

Many hoteliers struggle to make sense of what they're being charged for processing services, who is charging them and what services they need or can live without. Here are some "gotchas" to watch out for:

Every business, no matter what size, deserves to be treated fairly and honestly by business partners - especially when the cost of doing business is so high. There are scads of complexities and nuances in the card processing business, but the right processor should simplify the process, not make it more confusing. Studying up on The Merchant Bill of Rights is a great first step to leveling the playing field and gaining control of card processing fees.

Know your rights. Only then will you have the power to control costs, eliminate unnecessary charges and decide who gets a portion of your piggybank.

Bob Carr is chairman and chief executive officer of Heartland Payment Systems ¯ the nation’s fifth largest payments processor and the official preferred provider of card processing, gift marketing, check management, payroll and tip management services for the American Hotel & Lodging Association and 38 state lodging associations. In line with Heartland’s commitment to merchant advocacy and education, Mr. Carr spearheaded The Merchant Bill of Rights (www.merchantbillofrights.org) to promote fair credit and debit card processing practices for all business owners. He has also been a driving force in the enhancement of payment card security with E3™ (www.E3secure.com), Heartland’s end-to-end encryption technology. Mr. Carr can be contacted at Bob.Carr@e-hps.com Extended Bio...

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