The scary answer is, There is next to zero regulation!

Merchant account providers have free reign to say and do whatever the market will bear. The real issue is that merchants don’t have a choice. If you want to be in business, you are forced to play in a game where the opponents write the few rules there are and then changes those rules whenever they want. They can change fees and rates at any time without any notice. They make up their own terms and definitions. They don’t have to disclose fees or rates, and anything you, as a merchant, will sign is fair game.

This part of the credit card business is called “Processing,” while the other side is called “Issuing,” which is the issuance of the credit cards we all have in our wallets. The issuing side is HIGHLY regulated! Part of that regulation stops the banks from charging us more than 30% interest (the actual rates vary by state law).

What would the banks charge us if the government did not intervene? The answer to that can be seen on the processing side where the government is not intervening. In many instances, the merchant account provider will leave out the processing volume on the downgrade fees, making the rate not only unknown, but impossible to calculate. MRC has the top interchange experts in the industry, and even we cannot calculate the rate. There’s not a day that goes by that we don’t hear our clients’ disbelief: “How can they do that? Isn’t that illegal?” Sadly, although highly unethical, it is not illegal.

If you think we are being too harsh, just watch this short clip where Senator Dick Durbin is pleading with President Obama to bring regulation, even if just on the debit cards (which only makes up the smallest part of this industry). It is certainly an uphill battle when congressmen are paid by tax payers $174,000 a year to protect us and vote for what’s in our best interest. At the same time, there are financial institutions paying many in Congress over a $1,000,000 and some over $2,000,0000 a year to vote in their best interest.

For the most part, Congress is looking the other way, and it will be years, if ever, before this industry gets cleaned up. But Merchant Relief Council has brought significant change already to this industry in just a few short years by going after processors on behalf of our clients and forcing many of them to change how they do business. Yet the fight is far from over. Please take a moment to further the cause and sign the Merchant Petition or visit The Merchant Petition page on Facebook, and help us lobby Congress to clean up and regulate merchant processing.