Credit card processing fees and rates refer to the charges that businesses pay to accept credit card payments from their customers. These fees are typically charged by credit card processing companies, and they can vary widely depending on the provider and the specific terms of the agreement.
There are several different types of fees and rates that businesses might encounter when it comes to credit card processing:
- Transaction fees: These are fees that are charged every time a business processes a credit card payment. Transaction fees are usually a percentage of the total transaction amount, plus a fixed amount (e.g. 2.9% + $0.30).
- Monthly fees: Some credit card processing companies charge a monthly fee for their services, which can range from a few dollars to several hundred dollars depending on the provider and the specific terms of the agreement.
- Interchange fees: These fees are charged by the credit card issuer (e.g. Visa, Mastercard) and are a percentage of the total transaction amount. Interchange fees are generally beyond the control of the credit card processing company, and they are typically passed on to the business as part of the overall transaction fee.
- Chargeback fees: If a customer disputes a charge on their credit card and the business is unable to resolve the issue, the credit card issuer may reverse the charge and issue a chargeback to the business. Credit card processing companies often charge a fee for handling chargebacks.
- Termination fees: Some credit card processing companies charge a fee if a business decides to cancel their account before the end of a contract period.
It’s important for businesses to carefully review the fees and rates being charged by their credit card processing company, as these charges can have a significant impact on their bottom line.
Credit card fees that affect rates
There are several types of credit card fees that can impact the rates that businesses pay to accept credit card payments:
- Interchange fees: These fees are charged by the credit card issuer (e.g. Visa, Mastercard) and are a percentage of the total transaction amount. Interchange fees are generally beyond the control of the credit card processing company, and they are typically passed on to the business as part of the overall transaction fee. Interchange fees can vary depending on the type of credit card being used, the type of business, and the specific terms of the merchant agreement.
- Assessment fees: These fees are also charged by the credit card issuer and are a fixed amount per transaction. Assessment fees cover the cost of operating and maintaining the credit card network.
- Processing fees: These fees are charged by the credit card processing company and cover the cost of providing credit card processing services to the business. Processing fees can include transaction fees, monthly fees, and other charges.
- Markup fees: Some credit card processing companies charge additional fees (also known as markup fees) on top of the interchange and assessment fees. These fees are typically a percentage of the total transaction amount and are used to cover the processing company’s operating costs and profits.
By understanding the various fees that can impact credit card rates, businesses can better understand the true cost of accepting credit card payments and make informed decisions about their credit card processing options.
