When you swipe your credit card through a machine, the bank that issued your card pays a small fee to the company that owns the machine. This is called a “credit card processing fee.”
Credit card processing fees vary depending on the type of credit card you have and the company that processes your payments. Generally, though, these fees range from 1-3% of the total purchase price.
For small businesses, credit card processing fees can add up quickly. That’s why it’s important to find a payment processing company that offers low rates and doesn’t charge extra for things like monthly statements or customer support.
If you’re looking for a new credit card processing company, be sure to ask about their rates and fees. You should also read the fine print so you know what you’re signing up for.
Credit card processing fees can be confusing, but they’re important to understand if you want to run your business efficiently. By knowing what to expect, you can avoid costly surprises and make sure you’re getting the best deal possible.
Types of Credit Card Processing Fees
There are a variety of costs associated with credit card processing. These fees can include interchange fees, assessment fees, and merchant account fees.
Interchange Fees: Interchange fees are the most common type of credit card processing fee. They are assessed by the card issuer (e.g. Visa or Mastercard) and charged to the merchant's account. The fee is based on the type of card and the processing method used.
Assessment Fees: Assessment fees are charged by credit card networks (e.g. Visa or Mastercard) in order to cover the costs of operating the network. These fees are assessed on all transactions, regardless of the processing method used.
Merchant Account Fees: Merchant account fees are charged by the merchant services provider in order to cover the costs of setting up and maintaining the merchant account. These fees can include monthly fees, setup fees, and cancellation fees.
It is important to understand these fees and how they impact your business. By understanding the different costs associated with credit card processing, you can make more informed decisions about how to accept payments from customers.
Tips to lower your credit card processing fees
There are a few things you can do to lower your credit card processing fees:
- Choose a payment processor that has low rates.
- Use a credit card that has a low processing fee.
- Avoid extra fees, such as monthly statement fees or setup fees.
- Shop around for the best deal.
- Use a payment gateway to process payments.
- Use a point-of-sale (POS) system to accept payments.
- Process payments manually.
- Use a third-party processor.
- Split transactions between multiple cards.
- Use a prepaid card to accept payments.
These are just a few tips to help you reduce your credit card processing fees. By taking the time to explore your options, you can find a payment processor that fits your business needs and helps you save money.