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Credit card processing fees you should to know.
Credit Card Processing Fee. Credit card processing can be expensive, so know your costs in advance.
Credit card processing seems very simple. You call the sale, your customer swipes or dips the credit card into the card reader and the money is miraculously transferred from the card to your business bank account. However, the magic part of the process by which money is transferred from your customers to you is a very complex process consisting of data routing, verification and authorization, which involves many players, including network cards, banks, and credit card processing companies. Along the way, there are several credit card processing fees that you can meet.Each player plays an important role behind the scenes in transferring money for each sale, and in return imposes a small percentage of each transaction that helps facilitate. Due to the complexity of the process and the number of players who touch each transaction, credit card processing can be expensive.
To get the best price for your credit card processing service, you need to learn about the various pricing models used by the processor and how they work, so you can determine which ones can save the most money for your business. You also need to know the various fees often charged by credit card processing companies and which fees you don't have to pay. Understanding this information helps you evaluate this important service as a smart consumer, and gives you the knowledge you need to negotiate lower rates and fewer fees so that your merchant account can accept credit cards.
In this guide, we check the most common rates and fees for credit card processing, including:
- Processing Rates: Find out what types of pricing are most suitable for small businesses like yours. We specify various types of rates offered by most credit card processing companies and provide our recommendations.
- Standard Costs: Learn about the general fees that most major processors are subject to.
- Costs that must be avoided: Find out which fees you may not pay. We include cunning fees that are not charged by the best processor.
- Rent or Buy: Find out how the cost of making a rental is more expensive than buying your equipment.
- Negotiation Tips: Get instructions on negotiable fees.
Processing Costs: What is the Difference Between Rates & Fees?
When you make a contract with a credit card processing company, you usually pay two different sets of fees: rates and fees. Rates are the fees you pay for each transaction. Cost is the cost that you pay to the processor to maintain your account.What are Discount & Transaction Fees?
Credit card processing rates usually consist of one or two parts: only the discount rate or discount rate and the cost per transaction. The discount rate is the percentage of each transaction and the cost per transaction is the fixed fee you pay each time someone pays with a credit card, regardless of how much the purchase costs.To understand which pricing models and tariffs are negotiable, you need to know what is included in the tariff. Both the discount rate and the cost per transaction consist of the following costs and additions:
Interchange rate
This value varies depending on the type of card your customer uses. This accounts for most of the discount rate and is paid to the issuing bank. This is a non-negotiable fee set by the card brand, and each processor pays the same amount for this part of the transaction fee. Card brands publish tariff tables on their website.
Assessment Fee
This is an additional negotiable fee set by the card brand, and once again, each processor pays the same amount. This value varies depending on the brand of card that your customer uses, such as MasterCard or Visa, and is paid to the card brand. Assessment fees can also include MasterCard Network Access and Brand Use (NABU), Visa Network Acquisition Processing Fee (APF) and Discover Data Usage fees.
Processor Markup
This is the only part of the negotiable discount rate. Instead of being set by card brands, it is determined by a credit card processing company.