Businesses Seek Strategies to Control the Increasing Costs of Accepting Credit and Debit Card Payments

New AFP publication explains how to qualify for lower interchange rates and avoid processing pitfalls

Bethesda, MD - May 18, 2006 - Managing the cost of accepting credit and debit card payments is a growing concern for businesses because of increasing card volumes, rising interchange rates and complex fee structures, according to the Association for Financial Professionals (AFP). In a new electronic publication, the AFP seeks to help businesses and other organizations understand how the payment card process works so that they can proactively manage and reduce expenses while avoiding the pitfalls that increase costs.

"Card acceptance costs and interchange are among the most controversial payments issues facing AFP's members," commented Arlene S. Chapman, CTP, AFP's Senior Consultant, Technical Services. "AFP undertook this project as part of our ongoing effort to serve as a vital educational resource for the finance profession. By understanding how the card payments process works, businesses will be in a better position to implement cost control measures. The Corporate Guide to Card Payments and The Role of Interchange provides information that will help them to negotiate the mark-up over interchange, avoid unnecessary downgrades, control chargebacks and shift payments to lower cost tender types."

Card payments have utterly transformed the financial services landscape since their modest beginnings more than 50 years ago. Over 36% of consumer payments in 2004 were made with electronic payment vehicles, the majority of those on some type of plastic card. In 2004, U.S. consumers charged $1.43 trillion in credit payments alone, a year when Americans held over 566 million credit cards and 290 million debit cards.

As a consequence, interchange has become a major revenue stream for financial institutions as well as a large and growing component of merchants' expenses. While the trends driving the concern over payments costs are clear, there is far less clarity about possible solutions to the cost-control challenges faced by businesses. Many organizations have reached out to lawyers, regulators, consultants and even competitors in an effort to develop strategies to reduce these expenses.

AFP's new publication, A Corporate Guide to Card Payments and The Role of Interchange, explores in new levels of detail the payment card acceptance process and the strategies available to business and other organizations to proactively manage and reduce expenses. The Corporate Guide describes the transaction and economic flows in credit and debit card systems, key network participants, the structure of interchange pricing and related fees, and ways to control costs and avoid processing pitfalls.

A Corporate Guide to Card Payments and The Role of Interchange was written for AFP by First Annapolis Consulting, Inc., a leading payment systems advisory firm. It is available in the AFP bookstore on the AFP Web site at http://www.afponline.org/pub/store/pubs/ecgpay.html

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The Association for Financial Professionals (AFP) headquartered in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards. Sponsored by the Association for Financial Professionals, the CTP designation is the globally recognized industry standard for treasury and a requirement for a changing profession. More than 16,000 professionals have earned AFP's certification since 1986. For more information about AFP visit http://www.AFPonline.org/