In What You Need to Know About Credit Card Processing and About The Processing Fees For Credit Cards, we went over tips to be more critical about credit card processing and an overview of the processing fees. Each of these blog posts are a great starting point to understand the fees that you may be charged as a business as well as the tips you should be aware of when choosing a credit card processing company. We also go over the process for credit card acceptance to ensure that you have all of the necessary information to know who the right merchant service company is for your establishment.
In today’s blog, we’ll be going over a similar topic, but helping you get smarter about understanding them. No one wants to pay extra fees nor do they want to feel like they don’t understand something when so many other people do. Before you feel like you’re over your head in trying to untangle the confusing mess that are merchant services, we’ll break down exactly what you need to know about credit card processing fees. For more information about merchant services and how Journey Business Solutions can meet your needs, contact us today. We service the Dallas, Fort Worth, and the Rio Grande Valley area.
How Do Credit Card Processing Fees Work?
This is one of our most asked questions because so many people need a refresher on it. Running a business is enough on your plate, which is why we offer so many helpful tools to keep you organized and making sure that you’re making money instead of spending it all on little things that slipped through the cracks. Credit card processing has four factors involved in it. These four factors are what affect the processing fees when a credit card is charged at your business.
The Merchant Account Provider Fee
Firstly, before you can really charge a credit card, you’re going to need a merchant service account, so that the credit cards networks can process the credit card. A merchant account provider will make money off of the charge as well as the interchange rate, which we’ll touch on below. The charging fee is a negotiable amount and is figured out due to the sales value as well as the type of business that you own. Whatever the business may be, each one can pay a different rate even if they are with the same account. For example, let’s say that you own a nail salon and a restaurant; you could end up paying different fees even if you have the same merchant account provider.
The Interchange Rate
The next factor is the interchange rate. The interchange rate is what the credit card companies charge for the use of one. When a customer runs their American Express, Discover, Visa, or Mastercard, an interchange rate will occur. The interchange rate will depend on the type of the credit card that’s used and the amount will vary. These are non-negotiable because of the company.
The Setup & Monthly Fees
The next factor is the setup and monthly fees. The fees that you can expect from merchant account providers are these two because they pay for the security, support, and the PCI compliance, so that the credit card information is safe. Additionally, when cancellation fees take place, this is under the umbrella fees as well.
How The Credit Card Is Processed
Lastly, there’s a fee for how the credit card is processed. The fee will depend on the merchant account provider and the in-store transactions. The in-store transactions are when a customer swipes the card. This lowers the risk of fraud, so the fees are usually lower. When online orders are purchased or keyed-in ones such as over the phone, then there’s a higher chance of fraud and the fees will be higher.
While credit card processing fees can be confusing and a bit convoluted, we’ll work with you to better understand them. When considering fees, you’ll need to understand the three main ones, which are recurring, one-off, and required. For a further breakdown of these, talk to an expert at Journey Business Solutions to ensure that you know the big picture of these processing fees.