The client engaged with CMSPI to validate and benchmark its costs across interchange, margin and the impact of 3D-Secure.
Prior to working with CMSPI, the internal team was confident in their visibility of these factors due to ongoing initiatives to breakdown and optimize the value chain. CMSPI found several areas of inefficiencies, overcharges and opportunities that the team had not identified. These findings led to a significant 7-figure reduction in overall annual costs, positively impacting the client’s bottom line.
Based on breaking down the complex data available from the processor’s online reporting portal, CMSPI calculated the effective Merchant Service Charge that the client had been charged for each individual card type and compared this to the various contracts in place during the period under review. CMSPI identified that the processor had been overcharging the client for card payments for over 3 years and the overcharge alone was worth a significant 7-figure sum. CMSPI also identified that in the past, the processor had re-priced the client’s European transactions in an apparent attempt to disguise the overcharge.
The information available from the processor’s reporting portal was fairly high level and did not breakdown transactions in to individual card types or issuing regions. Using benchmarking data from other CMSPI clients, and based on conversations with the current client to understand how transactions were processed, CMSPI calculated an underlying interchange and scheme fee cost for the client’s transaction profile.
Comparing the processor’s contracted charges to the underlying costs revealed a margin for the incumbent of millions of dollars annually while CMSPI’s benchmarks suggested a market approach would return a margin that was a fraction of what they had been paying. CMSPI also provided in-depth analysis of the impact of enabling 3D-Secure.
CMSPI identified savings that the merchant’s internal teams could simply not identify, leading to a substantial 7-figure annual savings.
Additionally, CMSPI was able to review the consequences of implementing 3D-Secure based on the merchant’s payment profile, and provided a thorough analysis of the potential impact this system could have on sales, fraud and overall customer experience.