B&H Photo nets a significant cost reduction in credit card processing fees.
Founded in 1976, B&H Photo is a wildly-popular electronics supplier known for its personal and passionate expertise in photography, film, and audio technologies.
B&H processes a substantial volume of credit card transactions on a daily basis, both in business-to-business and business-to-consumer transactions. 99% of this comes from their ecommerce storefront, and is thus defined as card-not-present transaction volume.
In this type of processing mix, and at their volumes, interchange rates can get very complicated, are difficult to control, and often result in significant overcharging.
Fortunately, B&H had an ace in the hole: a highly experienced and savvy in-house finance team. The B&H merchant account was incredibly well-managed already, with a proactive approach to their reporting and monitoring of credit card processing fees.
Prior to engaging with Verisave, B&H had already been successful in optimizing many areas of their merchant account, and had identified additional opportunities to reduce spend.
They knew money was still being left on the table, and so they engaged the experts at Verisave.
The Challenge
Credit card processing fees are incredibly complex and ever-changing. B&H had recently seen an increase, from all major card brands, on rates related to some of their most common transaction types.
To correct or offset fee increases of this kind requires extensive industry data and benchmarking … even the most sophisticated finance teams will not have the time, or access, required to gather and analyze this data effectively.
And even with the industry data in-hand, careful strategy is required to make good use of it.
How do our fees compare against best-in-industry rates? How do we access benchmarking data? How do we justify removal of improperly-applied fees?
The Solution
When B&H engaged the Verisave team, the goal was clear: they needed help in accessing and leveraging extensive industry data and insights, and to formulate an effective optimization strategy.
Verisave first set to work in optimizing several factors within the VISA and Mastercard processing rates. These adjustments took place on the back end of the merchant account, so as not to disrupt current business practices or their customer experience.
With these optimizations in place, Verisave then worked with American Express to achieve substantially lower rates for B&H.
Additionally, Verisave's benchmarking data and industry expertise helped to justify the elimination of several fees that the B&H team had previously identified as areas of concern.
The Results
In total, B&H realized a cost reduction greater than $2 million per year. Most of that came from VISA, Mastercard, and American Express processing fees, which were reduced by $1.4mm per year. Processor fees were reduced by $180k per year, and miscellaneous processing fees were reduced by $500k per year.
Quick Facts: Retailer Payments Cost Reduction
- Interchange and AmEx Fee Reduction: $1.4mm/yr
- Processor Fee Reduction: $180k/yr
- Miscellaneous Processing Fee Reduction: $500k/yr
- Total Processing Cost Reduction: $2.08mm/yr
Rates published by the card brands themselves are the baseline for this kind of work — see the Visa Official Interchange Rates and the Mastercard Merchant Rules for the published schedules behind these categories.
If your business is looking to better manage your merchant account or reduce fees, we're here to help. We fix and monitor your existing merchant account, and we bring that money back to you. No need to change processors or add a project to your team's already hectic workload. Schedule a consultation today.
