A handful of credit card processors have been increasing fees for consumers due to a new Internal Revenue Service (IRS) reporting mandate, according to one industry expert.
Phil Hinke, president and founder of MerchantFeeSavers LLC, said processors are attempting to recoup expenses in light that they are now required to report their revenue from credit cards to the IRS, according to Vin News Service.
The rule, passed in 2008 as part of the Housing and Economic Recovery Act, is detailed in section 6050W of the Internal Revenue Code and went into effect this year. (Related: IRS to Keep Closer Eye on Your Debit and Credit Card Purchases)
“It appears the merchant account providers are using other terms on the merchant statement to describe a fee with the IRS component in it,” Hinke said, according to Vin News Service. “Some of those terms appear to be ‘reporting fee,’ ‘regulatory fee,’ and ‘reg comp fee.’ ”
Processor are legally allowed to assess additional merchant fees in order to cover costs associated with IRS reporting, Hinke believes.
“Keep in mind that all merchant applications or merchant agreements will have some clause giving the provider the right to increase fees or add new fees,” Hinke said. “Just like with monthly PCI (payment card industry) fees, I have seen monthly reporting fees vary dramatically. This may suggest that some processors are using these fees as an additional revenue source. As a rule of thumb, all annual and monthly fees should not add up to more than $200 per year.”
Click here to read the full article, including reaction from Heartland Payment Systems and PayPal.
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