Is Your Payment Processor Lying to you? Three Key Ways to Identify Processor Dishonesty

Dec 2, 2020

In the payments industry, there always seem to be a number of payment processors engaging in dishonest business practices, which can lead to merchants being misled and deceived if they are unaware of how to spot offers that are too good to be true. At Payscout, Integrity & Trust is our first Cultural Attribute, so we created this guide to help you identify processor dishonesty and recognize if a processor is engaging in unethical practices.

Here are our top three ways to know whether your payment processor is lying to you:

  1. If they are hiding fees from you.
  2. If they are trying to lock you into a contract.
  3. If they claim to have preferential Interchange rates.

If they are hiding fees from you.

Each month, merchants typically receive a statement from their payment processor, with an itemized breakdown of their monthly processing fees. The statement should clearly display any fees that were charged directly by other parties (e.g. card-brands or banks), as well as fees that were charged by the payment processor. However, some processors will mislead merchants by disguising their own mark-up fees as part of the fees charged by the card-brands or banks, which are typically less than .20% of the processing volume. As a result, it may not be apparent to the merchant that the processor is charging additional fees, because the processor has hidden these additional fees under other items in the statement. This is one of the most common ways that processors mislead merchants about their fees, which is why it is crucial to understand what the charges on your statements are and how they are calculated, so that you can recognize if anything is out of place. (If you need help with understanding your monthly statement or determining if any fees have been misrepresented, please contact our team at for assistance.)

If they are trying to lock you into a contract.

When choosing a payment processor, another warning sign that your processor is being dishonest is if they try to lock you into a contract. There is no requirement for merchants to be committed to a processor for a fixed amount of time, but oftentimes contracts are issued by dishonest processors to force the merchant to stay. Since many bank contracts include a term and termination clause, the processor should be willing to state in writing that it won’t be enforced. If a payment processor was engaging in ethical practices, they would provide the merchant with the choice to stop processing payments if they wished to, and would not try to deceive the merchant into being obliged to process payments with them with no way out.

If they claim to have preferential Interchange rates.

Currently, there are processors who claim to be able to lower your Interchange rates, or provide you with special discounted rates. This is a major red flag that the payment processor is misleading you on pricing, as Interchange rates are set by the card-brand companies and are therefore non-negotiable and non-adjustable. In these cases, what is actually happening is that the processor has added their own mark-up fees onto the interchange rate – resulting in a false rate that is higher than the standard rate – and then has subsequently offered to lower this false rate. Therefore, if a processor claims to be able to offer preferential Interchange rates, you should immediately be wary, as Interchange rates are fixed and cannot be adjusted in any way by processors. For a more detailed overview on what Interchange is and what to look out for, take a look at our Interchange Explainer article.

If your payment processor has displayed any of the three warning signs that we have discussed in this article, then you should be concerned, as they are likely engaging in dishonest business practices aimed to mislead customers. We hope this information will enable you to be more informed about processor habits so you can detect dishonesty, protect your business, and steer clear of processors engaging in unethical practices. If you have any further questions or concerns, our team at would be happy to provide you with any additional information you may need to ensure that you are fully informed at all times.

Let’s get your payment processing on the right track.

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