The credit card processing fee is the amount that merchants are charged to accept debit and credit cards. These fees are usually a percentage plus a flat rate. Average credit card processing fees are around 2%-3% of the total transaction amount with a $0.30 flat fee.
Understanding Payment Processing Fees
Most companies only think about transaction fees, late-payment fines, or high interest rates when they consider credit card fees. Several additional fees aren’t necessarily standard across companies or industries. Your specific combination will depend on factors such as your payment processor, the industry you work in, accepted credit cards, and more.
The following are some of the costs associated with accepting payment cards:
- Exchange fee: Cover the costs associated with payment risk
- Rate of exchange: The Federal Reserve charges a fee to the seller
- Assessment Fee: Based on monthly sales
- The markup fee: Is the amount paid to the processor per transaction
- Flat rate: Possible monthly service fees
- Minimum fee: Charged when monthly minimums are not met
- Charges: for bulk purchases
- The equipment leasing fee: Is related to the consumer market
- Chargeback Fee: This fee can be charged during disputes with customers
- Fee for payment gateway: Charged by a third-party gateway can offset costs by listing the specific costs of your organization.
Why Are Card Processing Fees So High?
The cost of the actual transaction is one of the factors that contributes to the high costs of card processing fees. The cost of updating and maintaining the card network, as well as the costs of fraud prevention and chargebacks, are included.
A factor to consider is the profit margin that credit card companies or banks make on each transaction. They usually charge higher fees for transactions that are high-risk, like those conducted online or by phone.
These fees are a necessity for businesses that accept credit cards. Businesses can lower the cost of processing credit cards by negotiating with their processor a lower rate or implementing surcharges for credit card users.
This post was written by a professional by Exzact Business Solutions. TRANSPARENT | AFFORDABLE | SIMPLE Merchant Services, Websites, and Social Media Done Right. Exzact Business Solutions are on a mission to educate local businesses to ensure smiles, savings, and solutions. Exzact clients save an average of 30% on their processing alone. No Contracts, Free Equipment, Local Support, No Rate Increases, and More. Exzact Business Solutions goal is to educate the local business community in order to ensure smiles, savings and solutions. Exzact Business Solutions is an Independent Sales Organization with strategic partnerships dedicated to cultivating reliable and trustworthy relationships in the Payment Card Industry, allowing to tailor products and services to the needs of each merchant. Contact EBS and see what a difference having the right advocate can make! Click here to learn more!
