OfficeMax is getting a piece of the entire pie
Posted by: Curtis Stevens on November 18th, 2009

OfficeMax is your standard merchant with credit card processing fees.  The other side of the table they are now getting into is the issue end.  When it comes to processing a transaction, there are several parts of the whole process.  It starts with banks issuing out credit cards.  They are referred to as issuers.  Visa/MC are the association that is tied to that particular card or bank.  You then have the merchant account provider that processes the transactions for the merchant and assumes risk.  Lastly, you have the sponsoring bank, where all merchant accounts must be sponsored by a bank.  However, they receive such a small piece of the pie, it isn’t worth considering.

Now, as a merchant, they have a cost of accepting a credit card, which has its own benefits that comes along with it.  On the flip side, they are now issuing branded Visa Cards.  I assume they have some type of agreement with a bank where they get a kickback on all transactions their customer’s process.  So now they are now not only getting the benefit of accepting a credit card, but are getting a little something back on the card issuing side.  This ultimately reduces their costs to run those particular transactions that are associated with those cards.

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