Credit card processing fees have been described as hidden costs of running a business, but that’s not exactly accurate. When you think about it, there are plenty of other hidden costs of accepting credit cards at your company that can cost you more than just processing fees… if you don’t take precautions to avoid them. That’s why we decided to create this guide to the hidden costs of credit card processing and how to avoid them, so we can all better understand the risks involved with using plastic payment options at our companies. Here’s what we found…
The average credit card processing fees in 2022
The average credit card processing fee is about 2.87%. However, this number can be higher or lower depending on the type of card you’re using and the processor you’re working with. There are also a few other factors that can affect your processing fees, such as whether you’re swiping or dipping the card, if you’re using a rewards card, and if you process international transactions. To avoid paying hidden fees, be sure to read the fine print on your processing agreement and ask your processor about any potential surcharges. You can also use a rate calculator to get an estimate of what your fees will be.
The 7 things you need to know about credit card processing costs
1. You might be surprised to learn that there are actually several types of fees associated with credit card processing.
2. The most common are interchange fees, which are set by the card associations and paid to the issuing bank.
3.Then there are assessment fees, which are also set by the card associations but paid to the acquirer bank.
4. On top of that, you have network fees charged by the processor, and these can vary depending on which network they use.
5. Last but not least, there are also flat-rate fees charged by some processors for things like customer support or transaction reports.
6. Some offer a better deal than others, so it’s important to look into all your options before choosing a processor.
7. Luckily we’ve got a handy rate calculator here on our site that will do all the work for you!
Comparison chart of credit card processors
When you’re looking for a credit card processor, it’s important to compare apples to apples. Make sure you’re comparing features like monthly fees, gateway fees, and early termination fees. Also be sure to ask about interchange-plus pricing, which is the most transparent way to know what you’re really paying for credit card processing. To avoid hidden costs, make sure you understand all the fees associated with your account before signing up.
What are the fees and rates charged by credit card processors?
There are a few different types of fees charged by credit card processors interchange fees, assessment fees, and processor markup fees. Interchange fees are set by the credit card companies and are the same for all processors. Assessment fees are set by the card associations (Visa, Mastercard, etc.) and are also the same for all processors. Processor markup fees are what each individual processor charges on top of the interchange and assessment fees.
Do I have to pay anything extra for using my own merchant account provider?
You might think that you can just sign up for a merchant account and start processing credit cards, but there are actually a few hidden costs that you should be aware of. First, most merchant account providers will charge you a monthly fee. Second, you’ll also have to pay transaction fees every time you process a credit card. And finally, if you want to accept American Express or Discover cards, you’ll need to pay an additional fee.
What are the applicable discount rates if I meet certain criteria
There are three types of discount rates qualified, mid-qualified, and non-qualified. The qualified rate is the lowest rate and applies if you meet all the requirements set by the card issuer. To get the qualified rate, you must
- Use a swipe, dip, or tap to process the transaction
- Process the transaction within certain parameters set by the card issuer
- The card must be present (not keyed in manually)
- The customer must be present (not a mail order or telephone order)
- You must be a registered merchant with the card issuer
- You must have been processing credit cards for at least six months
Is there any way around paying all these fees
While there are a number of fees associated with credit card processing, there are also a number of ways to avoid or minimize them. One way is to choose a processor with low or no monthly fees. Another is to get creative with your pricing structure – offer discounts for cash or check payments, for example. You can also negotiate with your processor for lower rates.