The Secret to Saving Money on Credit Card Transaction Fees without Changing Your Bank

IMG was featured in the article "Giving and Taking Credit," from PKF Hospitality Research. Find out what CEO Vito Pagano had to say about hotel credit card fees, merchant services audits, and more:

More than 80% of hotel revenue was generated by credit card usage
in 2010*; every swipe of the card — room, food, nightclub tab, spa treatment — means a fraction of that charge is paid to the credit card transaction processor.

Surprisingly, few hotel finance managers carefully review their credit card transactions agreement in the years after signing these contracts. The hotel’s subsequent expansion might mean it has outgrown the rates and fees negotiated much earlier. These agreements might force the hotel to pay excessive rates that are not in line with their current volume or fees that are not typical of the lodging industry.

Hotels request our free audit of their merchant services statement to ensure they are receiving the contracted rates. We decode the confusing line items, fees and charges, plus we confirm the rates are consistent with the original agreement’s terms, and align with the industry averages for a hotel with that revenue volume. Whenever we find inconsistencies, outdated pricing and hidden surcharges, we advise the hotel management of these opportunities for cost savings, and offer to represent them in re-structuring the terms of the agreement with the credit card processor.

The Breakers Palm Beach, a resort destination on Florida’s Atlantic coast, found its transaction reporting system presented fees and charges in an incomplete manner that was confusing to their accounting professionals. IMG’s expert analysis of the credit card transaction statements found that The Breakers was incurring higher transaction costs due to a recent change in its processing platform.IMG addressed this increase and also restructured the original rate agreement, which resulted in thousands of dollars in annual savingson Visa and MasterCard processing fees.

“We are very pleased that we are able to maintain our established relationship with our credit card processor. IMG explained the audit process to us and delivered on the restructured agreement. We have saved thousands of dollars, many times over, with their help,” said Jorge Cabrera, Director of Accounting, The Breakers.

Generally, because hotel credit card transaction processing agreements were signed years ago, two or three CFOs may have served at the hotel since then and few staff remember the negotiation process and the pricing terms. The overall increase in revenue in the hotel industry has contributed to a lowering of credit card transaction rates, yet individual hotels may not perceive a change in their fee.

Due diligence IMG of the merchant statements of Mohonk Mountain House, a year-round New York resort, revealed that the processing rates and fees charged to Mohonk were above-average for the hotel industry. In addition, the hotel’s monthly merchant statements used inaccurate terminology for these fees, which was misleading to Mohonk.

“Independent Merchant Group addressed these issues of above-average rates and incorrect terminology in discussions with our credit card processor. They negotiated new, lower fees, which cut Mohonk’s credit card processing costs for a significant annual savings,” said Jeanette Leone, Controller, Mohonk Mountain House.

IMG’s proprietary software is designed to analyze every aspect of a hotel’s merchant services statements and uncover discrepancies in rates, unauthorized charges and other fees.

After IMG secures these restructured terms and savings for our hotel clients, we monitor their merchant statements on a go-forward basis. We ensure the rates stay in place and we screen for unauthorized charges.

Companies that engage IMG’s services typically achieve a 20-65% reduction in credit card processing fees, without switching banks or processors. They maintain their relationships with the current processor or bank, without affecting the treasury management services and other products the bank provides.