COMMONLY ASKED QUESTIONS ABOUT LEGFI'S MERCHANT FEES
There are more ways to pay bills and make purchases than ever before. Despite the array of options, the most common method by far for members to pay dues and rent with LegFi is credit or debit cards.
What is a Merchant Fee?
The Merchant Fee is paid by a merchant (businesses, fraternity and sorority chapters, any entity that receives payments from buyers) to their processor to cover costs incurred to move money between accounts. LegFi currently accepts all major credit cards: VISA, Mastercard, Discover and American Express.
Why does the Merchant Fee change?
Over time, the cost of moving money from one account to another adds up and impacts the bottom line. Merchant Fee rates have increased, in part, because of the growing popularity of rewards cards. The credit card company sponsoring the rewards program needs money to fund its cash-back incentives, points and/or airline miles programs given to customers each time they swipe. Credit card companies fund their rewards programs via Merchant Fees.
Will the fees continue to increase?
As credit cards compete for your business by offering more rewards programs, fees will likely increase. Merchants and merchant groups negotiate with credit card companies to try and keep rates low. Congressional action or other federal government regulations could help prevent Merchant Fee increases; however, rewards cards are incredibly popular and most consumers don’t see Merchant Fees when they make a purchase. As a result, they aren’t motivated to change purchasing behavior.
Do all cards cost the same?
No. VISA, Discover, Mastercard and American Express each set their own individual rates.
Why can’t we “turn off” credit cards?
For 30 years, OmegaFi has offered our customers convenient payment methods, which benefits our clients’ operations. Our data shows that we receive more than 75% of all online payments by credit card. By turning off credit cards, we’d be creating an inconvenience for our customers.
How can we budget for this expense?
In LegFi , you can easily view the breakdown of payments between cards, checks, e-checks and cash. Simply take the payment volume of your cards and compare that to the Merchant Fee rate to determine a budget line item to cover this expense. If you aren’t able to determine the breakdown, you can use the OmegaFi average of 75%.
Is this happening to other companies?
Absolutely. If you use peer-to-peer apps, such as Venmo or PayPal to buy a product from a business, that business will pay a fee. You can expect to see more fees like this as the card brands increase their rates.