Payment processing companies across the United States are implementing sweeping rate hikes that have caught merchants completely off guard. From TSYS to PNC Bank to Fiserv, major processors are raising fees with minimal notice, forcing businesses to absorb unexpected costs or scramble to find alternatives.
The trend represents a seismic shift in how payment processors communicate with merchants. What were once predictable, transparent fee structures have evolved into a landscape of stealth increases buried in routine correspondence.
In August 2024, TSYS implemented a fee increase that left many of its merchants blindsided. Buried within a message promoting paperless statements, the company announced that it would be raising its settlement funding fee by 0.35%, or introducing the fee for merchants who didn’t already have one. The notice gave merchants just 30 days to accept the terms or terminate their agreements.
The Scale of Recent Payment Processor Rate Hikes
Multiple major processors have implemented significant fee increases throughout 2024 and early 2025, affecting thousands of merchants nationwide.
TSYS Leads Aggressive Fee Increase Strategy
The 0.90% qualified base discount rate for January 2025 is one of the highest jumps we’ve seen in a while. TSYS has been particularly aggressive, implementing rate increases in May, July, August, and November of 2024 alone.
Payment processing expert analysis reveals the scope of TSYS rate hikes. TSYS hiked this merchant’s base rate by 0.65%, which is a huge increase. This new 1.15% rate is more than double what the merchant paid previously (0.50%).
The company has also introduced new fees across its merchant base. Settlement funding fees of 0.30% have appeared on monthly statements, while qualified base discount rates increased by 0.65% and non-qualified surcharge processing fees jumped by 0.75% for many accounts.
PNC Bank Follows Similar Pattern
They are increasing the discount rate by 0.002, which is a 0.2% increase per transaction. PNC Merchant Services notified customers in October 2024 of rate increases effective November 1, 2024.
The bank, which relies on Fiserv for backend processing, has also introduced annual fees and increased specialized transaction fees. The Culiance Acquirer POS Transaction Fee rose to $0.045 per transaction, up from $0.035.
Fiserv Implements Network Pass-Through Increases
Fiserv has passed through numerous card network fee increases to merchants. The Mastercard License Fee is increasing to 0.011% on total gross processing volume per statement period, up from the old rate of 0.008%.
The company has also introduced new fees including a Visa Digital Credential Update Fee of $0.12 for network tokens and increased Visa’s Account Name Inquiry Fee to $0.10 from $0.05.
Bank of America Adds Multiple New Charges
Bank of America Merchant Services implemented several fee changes effective January 1, 2025. New charges include the Mastercard Name Validation Service Fee of $0.10 and the Mastercard Account Validation API Fee of $0.03.
The bank also increased the Visa Base II System File Transmission Fee to $0.0025 from $0.0018 and raised Visa’s Misuse of Authorization System Fee to $0.15 from $0.09.
Why Merchant Services Rate Increases Are Accelerating
Industry experts point to several factors driving the widespread fee increase trend across payment processors.
Rising Operational Costs Drive Increases
Payment processors cite increased infrastructure costs, regulatory compliance expenses, and enhanced security requirements as primary drivers of fee increases. The complexity of modern payment networks requires significant ongoing investment in technology and fraud prevention systems.
Limited Merchant Leverage Creates Opportunity
Most merchants lack the volume or expertise to effectively negotiate with payment processors. This power imbalance allows processors to implement increases with minimal pushback, knowing most businesses will absorb the costs rather than switch providers.
Annual Increase Strategy Becomes Industry Standard
Rate increases often happen quietly – Many payment processors, like TSYS, include rate increases in fine print or within monthly statements, making it easy for merchants to miss them until they impact their bottom line.
What was once an occasional adjustment has evolved into annual increases across the industry, creating predictable revenue growth for processors while placing ongoing pressure on merchant profit margins.
How Stealth Fee Increases Impact Merchants
The financial impact of unexpected rate hikes extends far beyond the immediate cost increase for most merchants.
Cash Flow Disruption Hits Small Businesses Hardest
For businesses operating on thin margins, even small percentage increases can disrupt cash flow planning. A 0.35% increase on $100,000 in monthly processing volume adds $350 in unexpected monthly expenses.
Compound Effect of Multiple Fee Types
Processors often implement increases across multiple fee categories simultaneously. Settlement funding fees, base rates, and transaction fees may all increase within the same period, compounding the total impact.
Limited Time for Strategic Response
The 30-day notice period common across the industry provides insufficient time for merchants to evaluate alternatives, negotiate terms, or implement changes to their payment processing infrastructure.
Protecting Your Business from Unexpected Rate Increases
Merchants can take proactive steps to minimize the impact of future fee increases and potentially reduce their current processing costs.
Implement Regular Statement Auditing
Monthly statement review is essential for identifying unexpected charges and rate changes. Many merchants discover increases weeks or months after implementation, limiting their response options.
Professional statement auditing services can identify bogus fees, inflated rates, and opportunities for negotiation. These services often pay for themselves through fee reductions and refunds.
Negotiate Better Terms Proactively
Merchants should negotiate processing rates annually rather than waiting for increases. Payment processors are often willing to reduce rates for merchants who ask, particularly those with strong processing histories.
Contact your processor’s retention department rather than general customer service for better negotiation outcomes. Retention specialists have broader authority to adjust rates and remove fees.
Establish Rate Protection Agreements
Some processors offer rate protection agreements that limit annual increases or provide advance notice beyond the standard 30-day requirement. While these agreements may carry additional costs, they provide valuable predictability for budget planning.
Maintain Alternative Processor Relationships
Developing relationships with multiple payment processors provides leverage in negotiations and options for rapid transitions if current rates become unacceptable.
Taking Action Against Unfair Rate Increases
Merchants facing unexpected fee increases have several immediate options for protecting their businesses.
The first step involves documenting all rate changes and calculating their total financial impact. This analysis provides the foundation for either negotiation or transition planning.
Contact your current processor immediately to discuss the increases. Many processors will reduce rates for merchants who formally object to increases, particularly if you present competitive alternatives.
If negotiation fails, professional merchant services consultants can often achieve better outcomes. These specialists understand processor pricing structures and have established relationships that facilitate successful negotiations.
For merchants with significant processing volume, switching providers may provide substantial savings that offset transition costs. However, carefully evaluate all fees and terms before making any commitment to a new processor.
Ready to fight back against unexpected rate increases? Contact a qualified merchant services consultant today for a free statement audit and personalized rate negotiation strategy.
