Merchant Credit Card Processing and Credit Card Reform

In this latest round of reforms, there was no attempt to address interchange rates or other issues directly relating to merchant credit card processing. But, as a merchant, if not as a credit card user, you should still be aware of how credit card reform affects credit card issuers and subsequently credit card users so you do not get caught in the crossfire. It is no secret that credit card issuers are not happy with the reforms that are being implemented because it eliminates some of the methods they have been able to use to generate revenues. As a result, they are collectively implementing practices that upset many credit card users. Some of the changes may include raising interest rates, even on customers that have good payment records, shortening billing cycles, and reducing credit and overage limits.

The reduction of credit limits and the amount of overage allowed on credit balances is an area that can cause some unexpected complications for merchant credit card processing. Nothing will raise the ire of a credit card paying customer more than having a credit card rejected because of insufficient credit. However, you may notice an increase of this type of incident as credit card issuers lower these limits, perhaps unknown by the customer. The Federal Reserve will require credit card issuers to notify customers 21 days in advance of any change in terms, but credit card users do not always pay close attention to such notices and may underestimate the amount of available credit on their cards. So, forewarned is forearmed; knowing that there is the potential for this to happen, you may prepare your sales-force to respond to such incidents in an informative and compassionate manner.

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