How InterPayments Helped a Major National Bank Provide Flexible Omnichannel Surcharging to SMB and Enterprise Merchants

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A major US Bank acted as an acquiring bank for a large number of merchants. Many of those merchants were demanding the option to surcharge their own customers to lower the cost of credit card acceptance. To meet this need, the bank needed a flexible solution capable of working with all the different third-party software already being used to process transactions. They also needed to limit overall change to the payment process, risk and compliance assurances, and the ability to generate revenue from this new value-added service. Only InterPayments met all of these needs, providing value to the bank, its merchants, and the merchants’ customers.


  1. Retain merchants with fairness to issuing cardholders
    – Without surcharging, the bank risked merchants departing to find not just a new acquirer, but new banking services in general. But they couldn’t use just any solution. As a bank with issuing and acquiring roles, they had to have a fair solution – for publicity, business, and regulatory reasons. High surcharge rates on cardholders might create issuing bank problems. 
  2. Minimal disruption – Major changes to the transaction system can cause chaos in every part of the bank’s acquiring business, so they couldn’t even consider a solution that required large-scale modifications. They had to maintain the third-party software they already used and would not rip-and-replace any system whatsoever. 
  3. Limit compliance risk exposure – Banks are highly regulated and rightfully risk averse. This bank needed a partner that both offloads compliance risk and offers full transparency for audits and monitoring. They also needed a highly customizable solution so they could set rules and rates at a per-merchant level. 

Existing Partner Solutions Did Not Meet Needs 

The bank looked to its current partners immediately, but the surcharging solution that was offered did not meet most business needs out of the box, because it was: 

Too Expensive It set the surcharge to a high fixed rate regardless of merchant or customer card type. This leaves merchants with no fair way to surcharge. It isn’t fair to customers who have to pay the higher rate, and it’s not fair to merchants who don’t have control over the rate – but it is hugely profitable for the processor. A fairer system would maximize merchant retention and benefit every party. 

Not Compliant It wasn’t compliant with state and American Express regulations, increasing risk exposure. It also didn’t provide the rate and target flexibility needed to meet the bank’s own additional internal compliance requirements. 

Technologically Infeasible –The solution required ripping-and-replacing MIDs, destabilizing existing systems. But most critically, the solution was not built with integration in mind. It could not be used with products the bank was already using through partnered independent software vendors (ISVs). This was a fundamental business need that made it impossible for them to implement surcharging through the processor – it was effectively incompatible with their software. They couldn’t have used it even if they wanted to. 

Why InterPayments was Chosen 

The bank decided to user InterPayments instead. InterPayments was able to go above and beyond the stated requirements thanks to: 

Contractually assured compliance: 

InterPayments offers full compliance with state and American Express regulations, but it also offers contractual guarantees and indemnification, significantly deflecting risk from the bank. The bank was also able to customize additional surcharge compliance that it needed to satisfy its own internal risk standards. 

Omnichannel integration,not replacement: 

No rip-and-replace is necessary with InterPayments’ API-driven solution; it’s built from the ground up to integrate with existing systems, leaving all ISVs in place in both SMB and Enterprise transaction systems. MIDs are also able to remain the same as before. 

Fairness and Flexibility: 

InterPayments offers merchants rate customization, including a rate that changes daily based on the true cost of card acceptance: a fair solution for customers and merchants. This helps ensure a lower rate – and because InterPayments charges a percentage based on fee recovery, it also minimizes costs to the customer. This fairness maximizes both merchant retention and merchant acceptance of surcharging. 

Everybody Wins with Fair Surcharging 

Customers get to choose payment methods to avoid the fee – but if they choose to pay with a credit card, they will always get the lowest surcharge rate possible.  

Merchants don’t have to spread the cost of card acceptance across all their customers with a price increase – the business cost of credit card acceptance stays where it’s incurred.  

A fair surcharge is easier for customers and merchants to accept, increasing surcharging volume. Depending on the implementation, banks, processors and ISVs can get a revenue share based on the increasing amount of fees being recovered.