A Business Owner's Guide to Billback Payments

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    Depending on the payment processing rate you choose, you may end up seeing billback pricing or enhanced bill back processing on your statement. Other terms used to refer to these rate plans include blended rate, mixed rate, or enhanced recover reduced. 

    Since billback costs can appear unexpectedly and impact your business’ bottom line, it’s important to understand the billback definition and how to identify one when it occurs.

    What Is A Billback?

    Bill back credit card processing occurs when a merchant adds surcharge fees on your billing statement to make up for additional processing charges on top of a prior credit card transaction. 

    This is because some transactions may have higher interchange fees than the stated percentage amount, such as manually keyed entries, purchases made by a rewards card, or a business credit card. 

    However, it may be difficult to identify billback charges since they appear in next month’s statement. Because of this, calculating total processing costs can be complicated, especially if you don’t know what you’re looking for. To identify these costs, you’ll need to access two consecutive billing statements. 

    Billback Pricing In A Nutshell

    To clarify the billback definition, it is best to look at an example of billback pricing. Although figures can vary depending on your payment processor, this can give you an idea of what to expect. 

    If a processor charges you a flat interchange rate of 1.7% for your transactions on a monthly basis, you may think that this is all you have to pay. However, this might not be the case. As we previously mentioned, different card companies and card types will have varying interchange fees that can impact the cost of a transaction. 

    Some transactions might have an interchange rate of 2.0%, but the processor may only charge you 1.7% for the month’s statement. To make up for this loss, the processor may charge an extra 0.30% the next month in the form of a billback that may not be apparent unless you know what you’re looking for. 

    Understanding Enhanced Billback

    Enhanced billback or enhanced recover reduced (ERR) can be even more expensive compared to regular billback charges. This involves the original rate in addition to the percentage difference of the interchange rate, on top of an extra fee that goes to the payment processor, hence the term “enhanced.” Often, this is not clearly outlined to merchants. 

    One sign of an ERR rate is when a processor claims that all of a merchant’s transactions will be billed at a specified percentage that may appear low. However, they don’t mention that these transactions are subject to a surcharge in addition to their fees — like account maintenance fees, statement fees, or PCI compliance fees. 

    While billback fees can be significant, it is best to avoid enhanced billback when possible in order to maximize cost savings for your business. At the end of the day, they only benefit the payment processor.

    Identifying Billbacks

    The good news is that identifying billbacks isn’t that difficult once you know what to look for. If you’re using a billback pricing scheme, you can identify billback fees under the “Interchange” column under the code “BB” for billback or “EBB” for enhanced billback.

    You can also compare the previous month’s statement with your current month in order to determine the markup that the payment processor is charging you. 

    If you find these terms on your statement, you can get in touch with your processor and have them change your pricing model or find a new payment processor to work with. By doing so, you can prevent unexpected surcharges from occurring in the future. Business owners can identify billbacks and learn how to stay far away from them when the time comes. 

    Frequently Asked Questions

    Here are some questions and concerns merchants may have about bill back credit card processing. 

    Is back billing legal?

    Bill back is legal and offered by some unscrupulous payment processors. However, merchants can avoid these pricing schemes and choose a more transparent plan. 

    What are the 3 types of charge accounts?

    The three main types of charge accounts are regular, revolving, and budget that allows businesses to buy goods and pay for them later. 

    Can a company back charge you?

    A chargeback may occur on your bill if a customer manages to dispute an item on their account statement because of fraud, an incorrect expense, or other reasons. 

    Conclusion 

    Ultimately, bill back pricing only harms businesses. This is especially true for businesses that have sales volumes that vary significantly every month. To avoid this, it is best to work with a reputable payment processor with a transparent pricing scheme and avoid companies that promise extremely low interchange rates. 

    To learn more about the basics of payment processing and how to choose a payment processor, browse our other articles on Processing Card today! 

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