By far the largest component of credit card processing fees is interchange fees. These are set by the card networks (Visa, Mastercard, etc), and fluctuate depending on many variables such as whether the card is present for the transaction, the card type, the number of transactions the merchant accepts, and many more.

To put this into perspective, Visa published their interchange fee structure for April of 2022. The document is 26 pages long. To say it's complicated would be an understatement.

In general, the more secure the transaction, the cheaper the interchange fee is. High-rewards commercial and corporate cards tend to incur larger interchange fees, while debit cards have a relatively low fee.

Interchange fees changing is not a new phenomenon; the card networks do it all the time, and they usually trend upward. This latest increase seems to be in response to commercial and corporate rewards cards.

Many of these commercial and corporate reward cards transactions are being placed in a more expensive interchange bracket, regardless of whether the card is present and other factors that would usually cause it to qualify for lower fees. The hospitality sector is likely to experience these larger interchange fees more than other industries because of the prevalence of these high-rewards corporate cards being used to book accommodations for employees who travel.

Payment processors who use a fixed/flat rate pricing model—such as Square, Stripe, and ResNexus Payments—are usually able to offer consistent fees at a certain fixed percentage and per transaction amount because the average interchange fees are lower than the combined flat rate and per transaction fees. This simplifies the processing fees charged to the merchant and allows the payment processor to earn a profit so they can continue doing business.

Now, with the increased usage of these high-rewards corporate cards and the new interchange rate categorization system from the card networks and the issuing banks, the interchange rate charged to the payment processor is often much higher than the fixed rate charged to the merchant. This means that, rather than turning a profit, the payment processor is losing money on those transactions.

This loss of revenue has compelled many fixed rate processors like Stripe and Square to increase their fixed rate for these new corporate reward cards. ResNexus Payments has had to follow this trend as well.

The result is that many payment processors who use a fixed/flat rate pricing model are forced to provide two tiers of flat rates: one that applies to the majority of card types and one for these new high-rewards corporate cards.

If you never or seldom have customers who use these high-rewards corporate cards, then most likely you will have little impact at all.

If you do experience large amount of high-rewards corporate card transactions, your fixed rate will be higher than what you're accustomed to for those specific transactions. For example, if you're used to paying 2.9% + $0.30 for every transaction, you might see something more like 3.5% + $0.30 for transactions with the high-reward corporate card types. You would still have the 2.9% + $0.30 for all other non-corporate card types. In essence, your monthly charges will have a more blended rate depending on the type of card used.

For many fixed rate payment processor providers, including ResNexus Payments, the answer is no. The higher pricing tier is only for specific scenarios with commercial and corporate rewards cards. All of your other transactions will have the same fixed rate that you're accustomed to.