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Consolidation and competition in the card-processing business has created an opportunity for issuers to renegotiate their processing contracts and gain additional incentives and better pricing, says Ed Lawrence, a managing associate with Westbury, N.Y.-based Auriemma Consulting Group Inc. "There are opportunities for card issuers of all sizes, especially the mid-tier issuers, to take advantage of a great amount of competition in the [processing] market to retain customers," says Lawrence. Issuers renewing their processing contracts should talk to the processor and renegotiate for better terms, including improved pricing and access to additional products and services that will grow accounts, he says. Contract renegotiations are beneficial for processors, too, even though issuers will want lower prices. The situation is a "trade-off," with processors granting lower prices in return for contracts of three to five years, says Lawrence. "Frankly, the cost reduction they are going to give or the incentives, it's nothing more than meeting" competitors' prices, he says.
