Markup creep and junk fees on 12 merchant accounts

The situation

The group takes about $1.5M a month in card payments ($18M a year) across 12 merchant IDs with one processor. The pricing schedule had not been reviewed since signing.

What was uploaded

• 12 months of merchant statements for each of the 12 merchant IDs (PDF)
• The original processing agreement and pricing schedule

What the engine found

• Markup creep

  $32,400

  The processor's markup rose from 0.30% to 0.48% of volume over 18 months, announced only in statement footers.

  Rule: markup_creep

• Non-qualified downgrades

  $10,404

  Transactions downgraded to higher-cost categories because batches settled late.

  Rule: nq_volume

• Statement, batch and annual fees

  $5,940

  Per-account fees not in the pricing schedule, repeated across 12 merchant IDs.

  Rule: junk_fee_statement

• PCI non-compliance fees

  $3,456

  Monthly non-compliance fees on 12 merchant IDs whose questionnaires were never prompted.

  Rule: junk_fee_pci

The numbers

Found

$52,200

Expected

$36,500

Recovered within 6 months

$18,200

Found and expected are yearly savings. Recovered is the saving realised in the six months after the processor repriced, plus refunded fees.

What it would cost, three ways

Over the same 6 months, in USD.

Time spent

About 6 hours: uploading statements, one call with the processor and a monthly check of new statements.

The lesson

The markup, not the fees, was most of the money. Comparing the effective rate every month is what showed the creep, and the processor repriced without the group changing provider.