Last year, the IRS adopted a new rule regarding the reporting of electronic merchant processing income. Credit card processing companies now have to report to the IRS all payments made to merchants. Third party processors have to report all payments made to merchants who process a minimum of 200 transactions and a volume over $20,000 for the year. So, for companies having a merchant account, you will be getting an IRS form 1099K from your processor.  If you use a third party service where the processor uses their own merchant account to process payments, you will get a 1099K if you are over 200 transactions and $200K.  The new rule is effective starting January 1 of 2011.

In short, the new IRS rules are increasing costs for merchant processors, and ultimately, this will result in an increase in monthly rates for most companies that accept credit cards.

Because VPS merchants all have their own merchant accounts, VPS merchants can expect an IRS form 1099K for all 2011 processing.  The new IRS reporting rule has already substantially increased administrative costs for processors, and nearly every merchant service provider has announced an increase in annual fees or monthly fees. At VPS, we've elected to increase our monthly cost by $5, meaning that your March monthly service fee will be $15.

If you have any questions, please feel free to request help (it's the fastest way to get an answer), or call us.