Hidden Fees May Lurk in Your Payment Solution Contracts—Here’s How to Avoid Them
Few people enjoy digging into the fine print. When it comes to working with potential payments vendors, however, it is critical that organizations stay on the same page. Traditional contracts could include language designed to quietly increase costs over the initially proposed flat rates after the payment solution is adopted. Merchants may ultimately pay effective contract rates double the size they expected during contracting.
The culprit for these rate increases: hidden fees.
Why Hidden Fees?
Merchants stumble upon hidden fees more often because vendors seek to lower per-transaction costs and create simplified flat rates. These rates look attractive on paper but don’t consider other vendor fees included in the contract language.
Flat rate structures often work for merchants initially, but they don’t scale effectively as transaction volumes increase. This makes flat rates far less scalable than a tiered rate structure. And working with flat rates also limits how strategic payments can be in the long term, impacting everything from operations to revenue growth. Instead, savvy merchants leverage tier pricing to optimize transaction fees at higher volumes.
Dig Deeper to Avoid Hidden Contract Fees
Merchants can dig deep and discover hidden fees in contract negotiation by taking a more strategic look at the contract process. Specifically, Legal and Finance functions can work together to create a contract strategy. While not every new payment solutions vendor will leverage every kind of hidden fee, it still pays to review contracts carefully and strategically.
Here are a few types of hidden fees to consider–and how Radial Payment Solutions avoids them in our contracts:
- Rounding of Interchange (IC) fees: Radial avoids these fees in our contracts and provides a true pass-through rate instead.
- Deposit Fees: Hidden fees pertaining to fund deposits. They can become significant if they occur daily.
- Management fees: Often payment solution vendors will add additional fees for dedicated managers or other resources. Radial provides these resources for free.
- Refund fees kept by the payment vendor: This occurs when vendors claim refund fees instead of passing them back to merchants. This is an especially important hidden fee for retailers dealing with high returns and refunds. And it is often omitted in contract conversations. Radial returns refund fees to merchants.
Additionally, many payments vendors no longer provide 100% fraud indemnification. Radial covers the cost if fraud occurs.
The Radial Difference: Skip Hidden Fees
Retailers and eCommerce merchants already face many challenges when it comes to online payments processing. Don’t let hidden fees be yet another hurdle to optimal payment operations. Radial Payment Solutions delivers end-to-end payment management, including providing comprehensive back-office capabilities, to streamline the entire process. We enable your business to grow faster, increase conversions, improve regulatory compliance, prevent eCommerce fraud, and provide customers a frictionless checkout experience—no hidden fees required.
Learn more about Radial Payment Solutions.
