Billback

Billback

Billback pricing is the difference in fees between the agreed-upon rate and the actual rate charged to different cards. The actual rate charged by each credit card company can vary, as can gift cards.

Processing companies will often offer a flat rate on all charges. However, some companies will work around this by presenting a monthly charge on the bill and adding in the difference.

By adding the additional charges from the previous month, these processing companies can legally offer a flat rate. At the end of the month, the company will evaluate the approved charges and determine which ones exceed their rate.

These charges are tacked on to the next month, making it difficult for you to identify which charges apply to the extra charges.

From a business standpoint, this is problematic. It is almost impossible to budget for billback as most businesses cannot be extremely selective about what cards they will accept. To deny a payment option means a lost sale.

As a result, billback charges can lead to a wide variety in the monthly income.

Billback pricing is generally viewed as legal, but unethical. This does not stop some processing companies from trying to cover that difference in their billing.

Most processing companies offer a variety of plans and many will boast about having transparency in their charges. This should allow you to determine if billback will be a problem.

The billback charges are the opposite of transparent. They are tucked away so it makes them almost impossible to fully understand.

The most common sources of billback charges are gift cards, linked rewards cards, business cards, and key cards. While these can and are often linked to credit cards, they must run first through the business and therefore tend to have higher rates than common cards.

In addition to having to be aware of the potential for a billback charge on your monthly invoice, you should know that it can hide behind different names. Blended rates, mixed rates, and enhanced reduced recovery are a few of the other names for the same charges.

The bottom line, the billback system is a way that processing companies can cover their assets. Processing companies are businesses. They need to make a profit just as much as any other business.

Billbacks, while used by many processing companies, are not absolute. They can be avoided if the provided options are carefully examined.