The Complete Guide To Merchant Account & Credit Card Processing Fees

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Updated on: Jun 2, 2020
Posted by: Hsin-Wei Luang

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You might be a new business owner thinking about taking credit card payments for the first time. Or you might be an old hand at credit card processing looking to lower your existing rates. Either way, you’d like to understand a little bit more about the ins and outs of the processing business so you’re not swindled by unscrupulous salespeople.

This is the article you need.

You’ll need to set aside some time, though. The article is long, but by the time you finish it, we promise you’ll have a much better idea about how the complicated world of credit card processing works. You’ll also understand how to protect yourself when you set out to look for a credit card processor.

We’ll give you some average rates that you should keep in mind as you look for credit card processors that might be right for your business. We’ll also explain why these average rates probably won’t work because of the complex business models these processors use. We’ll help you pinpoint which business model is likely right for you.

This article links liberally to other articles on our website, so if you wish, you can dive deeper for answers to your specific question. If you are a visual learner, consider checking out our infographic article about credit card processing fees.

Let’s get started.

Table of Contents

What Are Credit Card Merchant Fees?
Everything You Need To Know About Merchant Account Fees
How Interchange Affects All Of Your Credit Card Processing Fees
Common Merchant Fees For Small Business
Credit Card Processing Fees FAQ: Answers For Small Businesses
The Final Word On Finding Credit Card Processing Services

What Are Credit Card Merchant Fees?

When you accept credit cards as payment, you are always charged a fee for processing. This fee is what we generally mean when we say “credit card merchant fee.”

What Are The Average Credit Card Processing Fees For A Small Business?

We all know that having an average number in mind is very useful when comparing rates. From a very general standpoint, and according to Payment Depot (read our review), the average costs for credit card processing range from:

1.5% to 2.9% for swiped/dipped cards, and
3.5% for keyed-in transactions.

Also according to Payment Depot, a breakdown of average costs for the four major card networks looks like:

Visa: 1.43% – 2.4%
Mastercard: 1.55% – 2.6%
American Express: 2.5% – 3.5%
Discover: 1.56% – 3.5%

Please keep in mind that this is a rough number. Your actual fees depend on a lot of factors, including the type of transaction you process most often (in-person vs. online), your specific type of business (average risk vs. high risk), and the size of your average transaction. To understand how these factors can affect your rates, keep reading below.

Everything You Need To Know About Merchant Account Fees

The credit card industry is somewhat antiquated and lacks competition. As such, everyone upstream tries to pass their costs downstream, and typically (because of the lack of competition), they’re able to do just that. The best way to see where these upstream costs are being added is to understand how a payment card transaction works, so you can see where a charge might be tacked on to a particular transaction.

When you’re quoted a price by a credit card processor, you’ll usually see a percentage and a flat fee. Let’s start with why you’re being charged this way.

Why Merchants Pay A Percentage & A Flat Fee

When you sign up to take credit card payments, the first thing you might notice is that you are being charged in a somewhat unusual way: your cost for processing a payment card is a combined percentage plus a flat fee. There’s a reason for this, and it has to do with the upstream providers’ fixed business (e.g. equipment) costs and financing risk.

In order to process a transaction, the modern credit card industry uses a lot of computer technology, all connected to form a private computer network. Each player in the industry has costs to maintain their part of this network, including paying for hardware, software, and network connection. This maintenance cost is steady, so the upstream providers pass it down to you as a flat access/usage fee.

In addition to the computer network, there’s a financing aspect to every payment card charge. A credit card is really a mini loan a bank makes to the credit card holder, so there’s always a risk that the bank won’t be paid back. Even a debit card involves a bit of financing risk in the form of an overdrawn bank account. It’s not hard to understand that a bank would lose more money if someone failed to repay the loan on a $1,000 new TV than on a $10 lunch. The banks, therefore, want more money for taking the risk of a greater loss. To do that, you express that risk as a percentage of the total purchase.

So, for every payment card transaction, the merchant pays:

Processing charge = financing risk charge + fixed business (e.g. computer network) costs

The formula makes sense because it takes into account both the fixed costs and the variable costs involved in using a payment card. (Note that there are some payment processing business models that are only percentage-based. The percentage is usually nearer the higher end of normal, and the technology-related charges are typically consolidated into the percent charge.)

Next, let’s take a look at who’s charging what.

Know The Parties Involved In Payment Processing

In order to understand card processing fees, you also need to know about the parties involved in the industry. Consider these the financial “middlemen” between a customer and a merchant. They include:

Credit Card Associations: These are the companies that create credit cards, like Visa, Mastercard, and American Express. Sometimes, they’re called credit card networks. They set all the rules, determining a fair processing rate for each industry, how to maintain the security and encryption of hardware and software, how and when to advertise to consumers, and so on.
Credit Card Issuing Banks: These are financial institutions, like Chase, Citi, and Wells Fargo, that issue credit cards to consumers. Some card associations, like Discover and American Express, take on the role of an issuing bank as well, developing and issuing their own cards. The issuing banks are the ones who assess a consumer’s creditworthiness before deciding whether to issue a card to the consumer. After a consumer makes a purchase, the issuing bank is responsible for checking whether the charges are valid and if the consumer has enough credit on the card to make the purchase. The bank must then approve or decline the purchase, and then front the money to the merchant. At that point, it’s basically a matter of a loan repayment between the issuing bank and the cardholder.
Credit Card Acquirers: These are also known as acquiring banks, though they don’t all have to be banks in the traditional sense. They could, instead, be financial institutions with bank-like characteristics. They set a merchant up with a merchant account, which is a specialized bank account used solely to receive card payments from issuing banks. Often, a set of pre-approved entities, such as a credit card processor, can also draw from the account. Acquirers act as middlemen, communicating with and receiving money from the issuing banks, credit card associations, and credit card processors. They typically get involved in the transaction process after the issuing bank has paid the money for the transaction but before the merchant receives the money. They share the financial risk with issuing banks when a credit card charge is reversed. They also assess the creditworthiness of a merchant and the stability of the business before approving the business to take credit cards. We have a detailed article about acquirers if you wish to learn more about them.
Credit Card Processors: These are the one-stop-shop companies a merchant deals with to set up payment card processing. You can work with them directly or you might work with one of their resellers. Processors set up the payment processing for you, helping you get a merchant account and making sure you have the right hardware and software to take payment cards. Sometimes, the acquirer and the processor are the same company, but the merchant deals with only the processor part of the business (which means you won’t be able to negotiate down the acquiring side’s wholesale costs). Processors often contract with other service providers and bundle these services to you in one bill. For instance, once you are set up with a processor (usually for an extra fee), you can get a payment gateway to take online payments, an electronic vault to store your customer’s payment card information so repeat customers can check out faster, hardware and software to allow you to take payment cards with mobile devices, and similar value-added services.
Payment Gateways: These are special portals that route transactions to an acquirer, usually in the case of an online shopping cart. These days, processors typically include some sort of gateway in their offering, so you may not have to find one separately for your business.

Now that we’re familiar with all the major parties involved in payment card transactions, let’s look at how a transaction takes place.

Follow The Money: The Credit Card Payment Transaction Flow

The transaction process begins with a customer using a payment card (credit or debit), whether at a merchant’s store or online.

Authorization: Once the information on a card is read into the credit card machine or typed into a gateway, the information is sent over the internet to your processor for the next step. Your processor acts as a traffic cop and sends the card information to the appropriate card network (e.g. Visa, Mastercard, Discover, etc.) with a request to be processed. The card network then forwards the processing request to the issuing bank of the credit card, and the bank checks to see if the cardholder has enough credit to cover the purchase. If there are enough credits, and if the card is registered as valid, the purchase is approved and the approval message is sent back to the merchant. All of this is computerized, so it typically takes place in a matter of seconds.
Submission: The transaction between the merchant and the consumer takes place (i.e. goods or services are exchanged), and the merchant submits the authorized transaction for actual payment. The submission can take place right away or be held up in a batch somewhere along the process and then submitted at the end of the day or past the weekend. The submission first travels to the processor, who, like before, forwards the request to the appropriate card network. The network then sends the submission to the issuing bank. The issuing bank pays the appropriate amount.
Settlement: The payout from the issuing bank travels by standard inter-bank money transfer methods until the money reaches the merchant account. The card network, the processor, and the bank(s) take their cut of the transaction fees. Only then can the merchant take the money out of the account. If your processor is a third-party processor (also known as a payment service provider) this step is a little different, but the merchant gets the money in the end.
Disputes: Sometimes, a payment card charge is reversed days or months after the process described above. It could be that the merchandise was defective, or that the card charge was fraudulent/made without authorization; in either case, the cardholder demands the charge to be dropped. The merchant can either agree to a refund or enter into a dispute process to prove that the charge was not made fraudulently. Here, additional resources between the banks must be devoted to the dispute, so additional costs can be incurred.

Note that the transaction flow described above doesn’t quite describe a PIN/signature/”true” debit card charge. After your machine or gateway accepts the information of a customer’s PIN debit card and transmits the data to your processor, the processor routes the information through a debit card network to the issuing bank of the debit card, skipping the card associations. From there, the issuing bank and the acquiring bank communicate and then transfer the money directly between them once it is confirmed that the customer indeed has enough funds to cover the purchase.

Here, because a slightly different path with a simplified computer network is used and because of certain US government regulations (if you’re in the US), PIN debit charges usually cost less to process than typical credit card transactions. You can only take PIN debit if you have the right kind of machine (and a merchant account), but the hassle might be worth it if your customers like to pay with debit cards than credit cards.

Looking at the process above, each party that touches a payment card transaction will charge you a fee. So the card associations will charge you a fee, the issuing bank and the acquiring bank will share a fee, and your processor will take a fee. You may even be charged by parties you didn’t even know were involved! For instance, the computer networks (and the security and encryption that run on these networks) are often run by third parties contracted by the banks, card associations, or your processor. That cost is tacked onto the full processing cost as a set fee (such as a PCI compliance fee). If a repeat customer has ordered merchandise online, and you have stored previous card payment information, you might be charged another per transaction (or per month/quarter/year) fee for secure, PCI-complaint storage of that customer information.

As you can see, all the fees can add up. So how can you negotiate them down?

How Interchange Affects All Of Your Credit Card Processing Fees

We’ve gone over a typical payment card transaction flow and you understand that every time an entity touches that transaction, there will probably be a fee (which means sometimes an entity will charge you twice because they touched the transaction twice). Now, let’s look a little closer at these fees and talk about which ones you can do something about and which ones you cannot change.

Wholesale Fees VS Markup Fees

The terms wholesale and markup get thrown around a lot in the processing industry, so it’s easy to become confused about which fees really fall into which category. At its core, however, the distinction isn’t too difficult to grasp. The two main considerations are 1) which of the parties we’ve discussed ultimately collects the fee, and 2) how fixed the cost is across the industry. Here’s all you really need to know:

Wholesale Fees

Go to the issuing banks (interchange fees) and the credit card associations (card association fees)
Are fixed amounts regardless of which processor you use
Are non-negotiable

Markups

Go to your payment card processor, plus any other add-on equipment or software providers such as a payment gateway provider
Are different amounts from processor to processor
Are negotiable

As the merchant, you’re the “lucky” one who ultimately covers all these costs. Meanwhile, your credit card processor sits right in the middle of the fee collecting-and-directing process. They decide how to pay the necessary wholesale costs for running your account—while also adding markups to cover their own costs, paying other third-party service providers associated with your account, and turning a profit.

With the right processor, markup fees will be modest. With the wrong processor, you’re in trouble. What’s worse is that some processors make it as difficult as possible to know how much markup you’re paying by using bewildering terms and pricing models that would baffle even the most experienced business owner. For now, just remember that markup fees are different from processor to processor; these are what you should be comparing when preparing to open a new merchant account. Meanwhile, don’t try to shop around for lower wholesale fees or rates from various credit card processors. These rates are consistent throughout the industry and are not negotiable.

There is one more thing you should know about wholesale costs: they tend to differ from industry to industry and from card association to card association. They also tend to differ by the way the card is used—whether it’s an in-person purchase or over the internet. The reason for the difference has to do with risk.

Some industries, such as the gambling industry, are simply more prone to instances of impulsive purchases/chargebacks/fraud than, say, fast-food restaurants. It’s also easier to use a stolen card for an online purchase (aka a card-not-present or keyed-in transaction) than dipping a card in person (aka a card-present transaction). Everyone along the transaction chain wants to be paid more for taking a higher risk, so your costs will change depending on your industry and how your customers typically pay. In other words, if you compare your flower shop rates (low risk) with your buddy’s CBD shop rates (high risk)—even if you use the same processor charging the same markup—you’ll find that your buddy is paying more.

(Your processing cost also varies by type of card—credit, debit, rewards, corporate—but that has more to do with maintaining profit margins by passing costs down to you than with risk.)

Here’s a table showing some sample pricing models and whether or not you can easily pull out the wholesale fees and markups from the quoted rates:

Sample Quoted Payment Processing Rates

	Pricing Model	Wholesale Rate
0.25% + $0.10	Interchange-Plus	Not included
$0.10 (+ $99/mo membership)	Subscription	Not included
Qualified: 1.79% + $0.10 (Mid-Qualified: 2.19% + $0.15) (Non-Qualified: 2.99% + $0.20)	Tiered	Included
2.90% + $0.30 online 2.75% in-person	Flat-Rate	Included

This brings us to the concept of interchange. We’ve briefly touched and defined the term above, but let’s elaborate on this fee a little bit more.

Where Does Interchange Come Into Play?

While we’ve already seen that there are quite a few parties and places in the process flow that can charge fees, most pricing discussions hinge on one particular category of cost: interchange. This is mostly due to the fact that this wholesale fee makes up the majority of the cost of processing cards. Card association fees, also known as assessments—the other main wholesale cost—make up a non-trivial chunk as well, but it’s not nearly as large as the interchange chunk.

The interchange fee is strictly a wholesale fee. It uses the formula financial risk charge + fixed business costs. Because the formula relates to risk, the interchange fee can be different depending on your industry—again, lower-risk industries get a lower interchange fee while higher-risk industries get a higher interchange fee.

To complicate matters further, the interchange fee is decided by the card associations, and each card association can assign a different risk number, even to the same industry. In other words, the interchange rate for, say, a bookstore might be different if a customer uses a Visa card instead of a Mastercard card if Visa and Mastercard have simply decided differently on how much risk they wish to take for the bookselling industry. So, bear in mind as we discuss interchange fees below that this number can be different depending on both your industry and the card your customer decides to use for the purchase.

(This industry-dependent risk assessment takes the form of something called a merchant category code or MCC. Businesses that use merchant accounts are assigned an MCC from the list of pre-existing codes provided by the card associations to broadly identify the type of product or service their business offers.)

Despite the card association’s involvement, the interchange fee is ultimately collected by the card-issuing bank. The table below summarizes just a few examples, but there are hundreds of interchange classifications across the card brands. Visit the Visa and Mastercard websites for full lists, but note Discover and American Express do not publish their interchange fees. Interchange fees are reviewed and adjusted on an as-needed basis twice a year by the card associations, in April and October—so yes, your interchange rates can change over time.

Common Interchange Rate Examples

	Swiped/Dipped	Keyed/eCommerce
Basic Credit	1.51% + $0.10	1.80% + $0.10
Signature/Traditional Rewards Credit	1.65% + $0.10	1.95% + $0.10
Preferred Rewards Credit	2.10% + $0.10	2.10% + $0.10 / 2.40% + $0.10
Small Bank (Exempt) Debit	0.80% + $0.15	1.65% + $0.15
Big Bank (Regulated) Debit	0.05% + $0.22	0.05% + $0.22

Due to the central role interchange fees play in the processing industry, the pricing models used by card processors are primarily based on how interchange fees are handled. Before we go any further, take a moment to compare those big bank debit interchange rates in the table above to the rate of 2.9% + $0.30 or even the 2.75% charged by some flat-rate processors. You can start to see the pitfalls of a pricing model that lumps multiple (or all) card and transaction types together and then slaps on one blanket rate to cover them all. Of course, there are pros and cons to each pricing model for different business types, but you should definitely be aware of the wide variety of base costs behind the different card and transaction types.

Now, let’s take a look at the four main pricing models in more detail.

Understanding & Identifying Payment Processing Pricing Models

When it comes to selling merchant accounts, there are four popular methods of pricing: interchange-plus, subscription/membership, tiered pricing, and flat-rate. If you already have an account but don’t know your pricing model, you can identify which one you have by looking for key indicators on your statements.

Remember that the main distinction to be aware of in pricing models is what happens to interchange fees—are they itemized and charged completely separately from the processor’s markup (“pass-through” or “cost-plus” pricing), or are they blended in with the rate markup (blended pricing)? Take a look:

Pricing Model Overview

	Interchange Fees	Model Type	Generally Best For
Interchange-Plus	Separate from markup	Pass-through	Most businesses
Subscription	Separate from markup	Pass-through	High volume/tickets
Tiered	Blended with markup	Blended	Not recommended
Flat-Rate	Blended with markup	Blended	Low volume/tickets

For most merchants, we recommend signing up for one of the pass-through models. Otherwise, you won’t be able to see the true difference between wholesale rates and processor markups.

With the above in mind, let’s look at the various pricing models currently being used by credit card processors.

Interchange-Plus

This is the most transparent pricing model with the most understandable terms and fees. Interchange-plus itemizes wholesale fees and markups and clearly lists them on your monthly statement. This may make your statement a bit more difficult to read overall, but it’s worth it since you’ll know the precise difference between your wholesale fees and rate markups. Interchange-plus rate markups typically consist of both a percentage markup and a per-transaction fee markup, both of which are applied to all your transactions.

Subscription/Membership

This is a newer pricing system, but it’s catching on. It’s similar to interchange-plus in that the wholesale cost of each transaction is charged separately from the markup. The difference is that you do not pay any percentage markup on transactions, but instead pay just a small per-transaction fee. Then, an additional markup is charged as a flat monthly subscription fee. For merchants with large transactions especially, this kind of pricing can save a lot of money without decreasing transparency. Check out Payment Depot (see our review) for a great example of this kind of pricing.

Tiered

If you aren’t lucky enough to be on interchange-plus or subscription pricing, chances are you’re tied up in a tiered or ‘bundled’ pricing model. Even with the increased popularity of the above “cost-plus” models, the majority of business owners are on a tiered plan. Tiered statements may appear simpler at first, but in reality, this model makes it difficult to thoroughly understand your rates and fees.

Tiered pricing plans categorize credit card transactions into three categories:

Qualified,
Mid-qualified, and
Non-qualified.

Generally, qualified rates are the lowest. The transaction rates increase for mid-qualified and are highest for non-qualified transactions. Qualified transactions must meet all of the processor’s criteria for processing, such as a swipe/dip in-person with a batch settlement the same day. Failure to meet one or more standards may result in a ‘downgrade’ to mid-qualified or non-qualified tiers.

Some dubious processors take advantage of this more opaque pricing plan to charge merchants excessive markups. You may end up paying a lot more than you want to with little way to determine exactly what you are paying for. This is because processors often fail to disclose which tiers the merchant’s transactions are falling into, making it nearly impossible to determine the true markup rates over interchange.

Flat-Rate

This is like tiered pricing, but without the tiers. Instead, all transactions cost the exact same percentage and transaction fee, regardless of the wholesale cost. All costs are blended together to create one consistent rate and fee. This tends to make the transaction cost very high, especially for debit transactions. But since processors using flat-rate pricing (like Stripe and PayPal) usually do not charge a monthly fee, this pricing model often makes sense for low-volume businesses.

Putting it all together, below is a comparison table using a couple of types of business models together with numbers plugged in, so you can better see the charges:

	Test Case #1	Test Case #2	Test Case #3
Pricing Structure	Subscription	Interchange-Plus	Flat-Rate (Blended)
POS & Other Features Included	Yes	No	Yes
Negotiable Fees	Yes	Yes	No
Sample Interchange Rate*	1.51% + $0.10	1.51% + %0.10	N/A
Retail Processing Rate	interchange + 0.0% + $0.10	interchange + 0.2% + $0.08	2.6% + $0.10
Monthly Fee	$50	$15	$0
Fees paid on 100 x $50 transactions	$145.50	$118.50	$135
Markup paid	$60	$33	$54.50
Fees paid on 200 X $50 transactions	$241	$222	$280
Markup paid	$70	$51	$109
Fees paid on 200 x $100 transactions	$392	$393	$540
Markup paid	$70	$71	$218.00
Fees paid on 200 x $200 transactions	$694	$735	$1,060
Markup Paid	$70	$111	$436
* Sample interchange based on Visa non-grocery retail rate for standard cards. Rewards cards incur a higher interchange rate and a merchants’ overall interchange rate will vary, affecting total processing costs. While not every merchant can predict their interchange costs, they can use an estimated number of transactions and average transaction size to calculate markup. Flat-rate processing markup determinations were made using the same assumed interchange rate, but companies that offer flat-rate pricing (such as third-party processors) don’t always disclose how much of their costs are markup, and so the numbers are an approximation.

Keep in mind that these are estimated numbers using a single interchange rate. Real-world numbers will vary because you will encounter many different cards with different rates, and some transactions may be keyed instead of swiped, incurring a higher interchange as well. However, you can draw some conclusions here. For example, at a high volume, a subscription pricing model is often the best deal—especially if it includes any software subscription fees as well. An interchange-plus model might get the lowest rates but may not include all the extra software, meaning you’ll need to pay extra for it. And a flat-rate blended model is often a good deal for low-volume merchants, but as a business grows it becomes more costly.

Common Merchant Fees For Small Business

Now that you have an understanding of the business models typically used by the payment card industry, let’s look at your processing statement and see how we can generalize and categorize these charges. There are three types of charges, and they are:

Transactional
Scheduled
Incidental

We will elaborate on each below. For now, know that each of these fees can be charged by any entity in the transaction flow. The bulk of your fees, though, will tend to be what are called transactional fees, which can be charged by the banks, by the card associations, and by your processor.

Below we’ve compiled a list of the most common fees in the processing world, along with their typical price ranges, for your general reference. Your pricing model and your specific processor dictate which of the individual fees come through to you on your account. If you’ve got every single one, there’s a problem!

As we dive into the details, don’t lose sight of these big picture concepts regarding wholesale and markup costs:

A markup is anything beyond the established wholesale fees from either the card associations or the card-issuing banks.
Wholesale fees from the card-issuing banks come in only one form: interchange fees—all of which are transactional. Card association fees (assessments), on the other hand, can be transactional, scheduled, or incidental.
Many markup fees are negotiable, while wholesale fees are not.
A wholesale fee can be passed through to you by your processor “at cost,” marked up by your processor, or absorbed into the overall cost of running your account in another way. The same goes for costs associated with other add-on service providers — passing the fee straight through, marking it up, or absorbing the cost into another blanket fee are all possibilities.
Don’t get too hung up on your processing rates or any one particular fee. You must consider the entire markup amount by looking at all the rates and fees on your account in order to accurately assess your cost.

Transactional Card Payment Fees: What You Pay For Every Transaction

These fees are assessed every time you run a transaction. Your processing fee, for instance, is a transactional fee. Transactional fees usually represent the biggest cost of accepting payment cards. Transactional fees come in two forms: 1) percentages (e.g., 2.19%, 0.25%), or 2) per-item dollar amounts (e.g., $0.20, $0.0195). Often, both forms are charged on a given transaction.

	Typical Price Range	Wholesale	Markup
Interchange Rates/Fees	varies, tables are published	✓
Assessments	varies, see our list	✓
Processor's Rate Markup	varies, may be blended w/interchange		✓

Wholesale Transaction Fees

Interchange Fees: These are the fees the card-issuing banks charge for each transaction, and they represent the largest expense merchants (should) pay per sale and per month. Interchange fees typically consist of a percentage of each transaction accompanied by a flat per-transaction fee (e.g., 2.10% + $0.10). The exact cost per transaction depends primarily on the type of card (e.g., rewards, corporate, personal, etc.) and the way it’s processed (e.g, swiped/dipped, keyed). The card associations set these fees for the banks, and Visa and Mastercard publish the interchange fees online. Discover and American Express require permission from your acquirer to access their equivalent fees.
Assessments: These are the fees the card associations collect for each transaction, and they make up a smaller portion of your total card processing costs than interchange fees. Assessments are based on a percentage of the total transaction volume for the month. Depending on the card association, the main assessments currently range between 0.12%-0.15%, while an additional assessment percentage is charged on international transaction volume. Meanwhile, one or more small, flat per-transaction fees are also charged across your whole processing volume. These have different names depending on the association—APF (Visa), NABU (Mastercard), and Data Usage Fees (Discover) are the main ones. Visa & Mastercard don’t publish assessment fees at all (but some processors do publish), Amex publishes a few, and Discover restricts access. Therefore, we recommend using our full list for reference.

Markup Transaction Fees

Processor’s Rate Markup: All processors add some type of markup to the wholesale interchange rates of processing transactions. The markup may be blended with interchange, or be kept separate. With interchange-plus, for example, your processor will quote you something like 0.25% + $0.10. That is their markup over interchange—the amount they will add to the wholesale interchange rates. But, if you’re on a tiered pricing plan, you’ll get a quote with Qualified, Mid-Qualified, and Non-Qualified rates. Those quotes have the markup baked right into the rate, thus making it more difficult to tell what the processor’s true margin is. See the Understanding & Identifying Payment Processing Pricing Models section for more information.

Scheduled Card Payment Fees: Regularly Occurring Costs

In addition to transactional fees, you may be charged some predictable, flat fees as well. They vary by name, value, and applicability, but at least some of them will show up on your monthly statements.

	Typical Price Range	Wholesale	Markup
Fixed Acquirer Network Fee (FANF)	varies, published by Visa	✓
MasterCard Merchant Location Fee	$15/yr or $1.25/month	✓
PIN Debit Network Fee	$50-$62/yr	✓
Monthly Fee	$10-$99/mo		✓
Annual Fee	$0-$300/yr		✓
Statement Fee	$5-$10/mo		✓
Online Reporting Fee	$5-$15/mo		✓
Monthly Minimum Fee	$10-$25/mo		✓
Terminal/Equipment Fee	$5-$60/mo		✓
POS Software Fee	$25-$100/mo		✓
Payment Gateway Fee	$5-25/mo (+ trans. fee)		✓
PCI Compliance Fee	$60-$120/yr		✓
IRS Reporting Fee	$25/yr		✓

Wholesale Scheduled Fees

Fixed Acquirer Network Fee: Otherwise known as the FANF, this is a card association fee from Visa. While the exact amount varies widely based on your business type and monthly volume, it’s still is a predictable, flat fee. Your processor decides how to pass this along to you, but it’s typically assessed once per quarter.
Merchant Location Fee: Mastercard charges $15 per merchant location annually if you’re using a traditional processor. This is the wholesale amount, but how and when your processor charges you will vary. You will often see this fee as a $1.25 per month fee. The fee is waived for merchant locations with less than $200 in Mastercard gross monthly volume, charitable organizations (MCC 8398), or religious organizations (MCC 8661).
PIN Debit Network Fee: PIN debit, which not all businesses accept, operates on separate (but associated) networks to Visa and Mastercard (e.g., Maestro, Accel). Some of the main networks currently charge an annual network access fee of $12-$14/year to the processor for each merchant using the network. Depending on exactly how many networks are at play, this typically totals between $50-$62/year. If you accept PIN debit, you may see this fee passed through to you.

Markup Scheduled Fees

Monthly Fee: These are service fees charged each month, usually for the purpose of covering call center costs. Ironically, most of the phone calls that come in are the result of mistakes made by the merchant account providers, making them the cause of their own fees. If you’re looking for the lowest monthly fee possible (a good idea if you have a low volume), take a look at Payline Data. Also, note that if you’re on a subscription pricing plan, your monthly fee will be much higher. This is to help cover the markup over interchange that you’d otherwise be paying with an interchange-plus or blended plan.
Annual Fee: These are fees charged every year to cover the basic use of a provider’s services. This is generally a bogus fee unless you are paying it instead of a monthly fee, not in addition to.
Statement Fee: These are fees charged to cover printing and mailing costs for credit card statements. Some merchants bypass these costs by using electronic bill statements, but others charge as much as $15 a month for miscellaneous processing costs.
Online Reporting Fee: These are alternatives to statement fees, charged to merchants who choose to view their statements online. Most providers will not charge this kind of fee, and those that do often lump it together with others.
Monthly Minimum Fee: These are fees charged to merchants who do not reach a certain transaction total for the month or year. The minimums will vary by provider, but most of them are around $50,000 a year of volume and a $25/month minimum fee. This is another fee that is not charged by some of the better providers, such as Dharma Merchant Services.
Terminal Fee: These are charged to merchants who have physical stores, where cards are directly swiped/dipped. If you run a business online, you will not have to worry about this. Some providers try to lock merchants into terminal leases, but as we’ve mentioned before, don’t lease a terminal. Most of our favorite providers will encourage you to buy your machine outright for a low one-time fee. This can save literally thousands of dollars in the long-run. For an example of this, check out Fattmerchant.
POS Software Fee: If you purchase or subscribe to point-of-sale (POS) software through your processor, this fee will cover that. In some cases, basic POS software is included with retail merchant accounts at no additional charge beyond the main monthly service fee.
Payment Gateway Fee: These are similar to terminal fees, but they are applied to eCommerce businesses instead. Some processors have in-house payment gateways that are free of charge (CDGcommerce). Otherwise, gateways usually come with a monthly fee (and occasionally a per-transaction fee as well).
PCI Compliance Fees: These are fees paid to your processor for compliance with standards set by the Payment Card Industry. In the case of compliance, you have to pay the merchant account provider (monthly or annually) to make sure you remain in line with the regulations at all times. Unfortunately, some providers charge for this service without actually providing it, so you need to make sure you are being cared for at all times. PCI noncompliance fees, on the other hand, are incidental fees that you incur when you don’t follow your processor’s requirements to maintain your PCI compliance.
IRS Reporting Fee: These are fees that merchant account providers charge in exchange for reporting transaction information to the IRS (1099-K).

Incidental Fees: Occasional & Per-Occurrence Costs

Scheduled fees are always charged, but incidental fees only appear per occurrence. When a chargeback occurs, for instance, you are charged a chargeback fee. Some months you will (hopefully!) not have any chargebacks, so you won’t have to pay the fee at all.

	Typical Price Range	Wholesale	Markup
Processing Integrity Fees	varies, see our list	✓
Application/Setup Fee	$50-$100		✓
Early Termination Fee (ETF)	$300-$1000		✓
Account Closure Fee	$20-$75		✓
Address Verification Service (AVS)	$0.05-$0.25		✓
Voice Authorization Fee	$0.25-$4		✓
Retrieval Request Fee	$10-$15		✓
Chargeback Fee	$10-$30		✓
Batch Fee	$0.05-$0.30		✓
Non-Sufficient Funds Fee (NSF)	$20-$25		✓
PCI Non-Compliance Fee	$20-$40		✓

Wholesale Incidental Fees

Processing Integrity Fees: Whereas the main fees from the card associations are assessed on all your transactions, some are only charged as a penalty when you have not met the requirements for authorizing and/or settling transactions properly. These card brand fees typically include “integrity” or “misuse” as part of the fee’s name. They resemble transactional fees, because they are just a few cents per instance (Amex’s is a percentage), and are often grouped together on a statement with the rest of the more regular transactional fees. It’s common to incur a handful of these charges each month, but watch out if they become excessive. Again, see our full card brand fee list for assistance in identifying these fees.

Markup Incidental Fees

Application/Setup Fee: Most good providers don’t charge a setup or application fee, with the exception of certain high-risk account providers. Look for a provider that doesn’t charge this fee, or negotiate its removal.
Early Termination Fee (ETF): This is pretty self-explanatory. It is a fee that is charged if you cancel your contract early, and one you definitely want to avoid.
Account Closure Fee: Different and much lower than an ETF, this is charged no matter when your account is closed.
Address Verification Service (AVS): If you have an eCommerce or telephone order business, beware of the AVS fee. It will be charged on every single transaction. For retail businesses that occasionally key-in card information, you don’t need to worry about it as much. However, AVS is an important fraud-fighting tool, so keep that in mind.
Voice Authorization Fee (VAF): Rarely, you may be required to call a toll-free number in order to verify certain information before a transaction is authorized. This doesn’t occur often, so don’t worry about it too much.
Retrieval Request Fee: Every time a customer initiates a dispute on a charge from your business, it sets into motion the chargeback protocol. This retrieval request is the first step. The fee covers any expense related to the retrieval request.
Chargeback Fee: After the retrieval request, the actual chargeback may occur depending on the circumstances. If it does, expect another fee on top of losing the money from the sale.
Batch Fee: Every time you submit a batch of transactions, a batch fee (or batch header) is charged. It only happens once or twice a day, so don’t worry too much about an extra dime or two.
NSF Fee: If you don’t have enough funds in your bank account to cover your merchant account expenses, you will be assessed an NSF (non-sufficient funds) fee.
PCI-Non Compliance Fee: This fee will start kicking in monthly if you don’t meet PCI standards. It is possible to be required to pay a PCI compliance fee and a non-compliance fee at the same time.

Credit Card Processing Fees FAQ: Answers For Small Businesses

Below we’ve compiled some questions we frequently see on our website. We hope our answers anticipate some of the questions forming in your mind as you read through this article.

Can I charge my customers for my credit card processing fees?

Yes and no. Shifting credit card processing fees onto your customers is called surcharging. There are strict rules governing surcharges, and these rules are different for each state. Check out our article on surcharging, where we discuss the general pros and cons of this strategy. A convenience fee is another way to recoup your costs under certain conditions, so we recommend you read that article too.

I have ( business type ) with ( $ processing volume ). Which credit card processor is the cheapest for my small business?

We recommend you first look through our test case examples in the Understanding & Identifying Payment Processing Pricing Models section of this article to get you into the right ballpark of processors that are best suited to your needs. Total volume and business type (risk level) are important considerations, but other factors include your average transaction size, method of processing (card-present vs. not present), and any add-on services you might need. Our post on how much you should be paying helps break down these considerations, and our cost analysis workbook walks you through a complete apples-to-apples comparison between providers using your specific numbers. In the end, there’s no getting around the fact that you have to do the math for your own situation.

I process ( monthly volume ) and my processing rates are ( % ). Am I paying too much?

First, make sure to calculate your effective rate, which includes all the total fees you pay in a given month, divided by your total sales volume. This is the most important percentage you need to know, since every processor’s rates and fees work differently. Once you know this overall percentage, check out our complete guide to analyzing your processing statement to discern if you’re paying too much for your specific situation (and if so, why!).

A processor offered me direct/better wholesale rates. Is this possible?

The short answer is: no, this isn’t possible.

Wholesale rates are fixed and non-negotiable across the industry, and there will always be some kind of markup involved. However, many processors play with the terminology to their own marketing advantage. When processors tout “direct” wholesale rates or say they can “eliminate the middlemen,” they’re often just obscuring the way their own markup is charged. All processors add a markup in some form — it just depends on the pricing model and the individual processor’s method of implementing fees. Sometimes, all the processor is saying is that some form of “pass-through” pricing (like interchange-plus or membership) is offered, in which pure wholesale costs are passed directly on to you. That’s great! But, it’s nothing extra special — there’s still a markup coming.

“Better” wholesale rates is a slightly more nuanced topic. While wholesale costs themselves are indeed totally fixed, certain businesses (especially B2B) can refine their processing procedures to ensure their transactions fall into target interchange categories. This is referred to as “interchange optimization” and is beyond the scope of this guide, but you can talk to individual processors to learn how they handle this issue. Do note that there is little motivation for a processor to help you optimize interchange if you’re on a tiered pricing plan.

Will I have to pay more for taking Apple Pay, Google Pay, Samsung Pay, and other mobile payments? What about contactless cards?

No. You should not be paying more for taking these forms of payments. Depending on whether the payment is made in-store or online, you should be paying your regular card-present or card-not-present rates. If a processor is charging you more, then they’re trying to make additional money off you, and maybe you start looking for a new processor.

The Final Word On Finding Credit Card Processing Services

Every credit card processor has a different set of costs associated with its services. Some of them are unavoidable, but others can be negotiated. We recommend pass-through pricing (interchange-plus or subscription) to most merchants. Remember that many of the typical scheduled and incidental fees—not just your processing rates—are negotiable. If you process a lot of transactions, don’t be afraid to bargain with your processor. With that in mind, there are several processors out there that are very transparent with their fees and are more than happy to give you interchange-plus credit card processing fees. The majority of our highest rated processors do just that.

We hope this article has given you a place to start to find the best payment card processor for your business. Remember: there’s no overall “best” or “cheapest” processor—only a best or cheapest processor for your particular business. Making that final determination takes some sales data from your business and some math, but we promise that the time you spent analyzing the numbers won’t be wasted.

If this article has helped you in any way, please give us some feedback and let us know. Or, if you have more questions about the payment card processing business, let us know as well—maybe we’ll add your question the next time we update this article!

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Our Cost Analysis Workbook will ensure that you never overpay for credit card processing again by giving you access to the insider resources and knowledge used by every credit card processing company in the industry. Don't sign up for a merchant account without this resource!

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Hsin-Wei Luang

Hsin-Wei is a freelance writer focused on small business and technology writing. Before becoming a writer, she worked as a techie lawyer for many years until she came to her senses. Now, in her spare time, she plays frisbee with her Mini Australian Shepherd dog.

Latest posts by Hsin-Wei Luang (see all)

The 6 Best Credit Card Processing Companies For New Businesses & Startups - July 28, 2020
The Complete Guide To Cancelling Your First Data Merchant Account & Finding A Better Credit Card Processor - June 12, 2020
What Is An ACH Payment? Everything You Need To Know About ACH Transactions - May 14, 2020
Friendly Fraud Survival Guide: How Small Businesses Can Reduce Their Chargebacks & Save Money - May 7, 2020
What Is A Chargeback? Everything You Need To Know About Payment Disputes - May 4, 2020

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294 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

Jeff Citron June 8, 2020 at 2:37 pm

My processing company recently informed me of a situation that I was not only unaware of but have a hard time grasping. To make things simply, let’s say my fee to charge a customer card is 2%. When I charge a customer $1000, in essence, I receive $980.00 into my bank account. If I void that charge prior to our daily batch, they are saying that I will get debited the $20, even though I voided the charge and received no funding. Could this be true?

Jessica Dinsmore June 11, 2020 at 1:19 pm

Hi Jeff,

It is true. However, that’s not always the case. Some processors do refund the original transaction fees to the merchant. It really just depends on who your processor is.

Nikos Kabanopoulos April 9, 2020 at 12:49 am

Hi – do Visa and Mastercard publish their Fee Guides? (Scheme fees, processing fees, etc).
If so, how can I get a hold of them?
Thank you
Nikos

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore April 9, 2020 at 12:16 pm

Hi Nikos!
We’ve linked to both of their rules and fees here in this section of the article. Hope that helps!

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Rachel Black March 23, 2020 at 7:40 am

Could you provide any insight into the credit card transaction fees incurred by processors when using Apple Pay? I have been researching and have found a slew of different answers from several different sources, but nothing clear cut. Apple Pay claims that they do not charge any additional fees, but what do the issuers and processors charge?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 24, 2020 at 12:49 pm

Hi Rachel! We’ve got an article on Apple Pay that should answer all of your questions. Check it out and let us know if you need any additional clarification. Thanks!

This comment refers to an earlier version of this post and may be outdated.

Don February 21, 2020 at 10:32 am

Not sure I understand the math in your chart. For example, the Payline fees are $10 a month plus 0.2% +$0.10.

200 x $100 would be 200 x $0.10 = $20
$100 x 0.2% = $0.20 x 200 = $40
Monthly Fee = $10
Total = $70

The other figures also do not match up with what I am coming up with. Can you elaborate on where your numbers come from?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore February 26, 2020 at 11:48 am

Hi Don! We actually just updated this post- have another look and let us know if you still have questions. Thanks!

This comment refers to an earlier version of this post and may be outdated.

Vera January 14, 2020 at 12:43 pm

Say you have a Clover POS, and someone comes into the store and says I can lower your Credit Card Fees. Can I do that or do I have to stick with Clover?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore February 4, 2020 at 4:39 pm

Hi Vera,

If you don’t currently own the machine outright, switching processors will basically force that balance due and you’ll have to pay it off or risk ending up on the MATCH list and being banned from working with most processors. That’s not counting a possible ETF for their processing agreement. There’s a LOT of variance in Clover providers and how they handle contracts and machines, so getting out of it could be expensive and likely a headache.

If you CAN and want to switch, be VERY cautious. A lot of sales reps who walk in promising to lower fees like that are working on commission and are often motivated to neglect mentioning important fine print. Some great companies like Dharma Merchant Services & Payment Depot offer Clover AND they have really competitive, transparent rates. We’d definitely suggest checking your current contract and shopping around before signing on the dotted line.

This comment refers to an earlier version of this post and may be outdated.

Terry Miller December 31, 2019 at 5:28 pm

Hello,

All this information is amazing. I am trying to find out laws regarding a company that hires independent contractors ability to charge me (the independent contractor) for their credit card processing fees. I have a contract that does have anything in it about “processing fees” rather it just states that I get 69% of the commission from the sale yet I have been repeatedly charged for their clients credit card processing fees.

It seems that since they are my only customer because I only contract with them and I don’t process any forms of payment for them I should not have to cover their processing fees.

Any guidance as to how to find out these laws would be greatly appreciated.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 8, 2020 at 1:46 pm

Hi Terry,

This is a new one for us! We aren’t familiar with any laws specific to your question. That said, whenever there’s a signed contract, whatever is agreed to in the contract governs the relationship between the parties. So, if the contract doesn’t specifically talk about how you should split the processing fees, then you should ask the company to identify what language in the contract allows them to pass through the processing fees to you. See if they can identify that language and then see if the plain meaning of the sentence actually says that.

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Michael Vaughan December 13, 2019 at 7:23 am

Can I just say that I started looking at your website today and I can say I’m already in love. This is the exact kind of information we need. The Banksters are such criminal’s it’s a joke

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Emily Hale December 13, 2019 at 8:36 am

Thank you for your kind words, Michael. We are so glad you find our guide helpful!

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Yahya Ha December 7, 2019 at 3:11 pm

I really loved this article, and it gives merchants more clarity when it comes to finding out who to go to and what to watch out for in terms of payment processing. But what I want to know is, are there any payment processing companies that make it simple + straightforward with 1 set of fees that are affordable?

For example, are there any companies in the United States or Canada that offer Point of Sales more similar to Apple Pay & pay less in terms of fees? Or are the majority of all payment processing systems and transactions jam-packed with the fees mentioned as above and merchants just have to choose one or the other?

Sorry for the long question by the way, I’m just trying to learn more about payment processing providers to ready myself for ECommerce.

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Emily Hale December 9, 2019 at 12:34 pm

Hi Yahya,

Thanks for reading and the kind words. If you are looking for something simple and straightforward, the best option that pops out is Square, hands down. Of course, there is no one-size-fits-all option, so I encourage you to check out our full Square Review so that you can make an informed decision. You won’t face any hidden charges or fees, and it comes with lots of free goodness, so it’s worth a look. Hope this helps and best of luck!

This comment refers to an earlier version of this post and may be outdated.

Charles Ballard November 25, 2019 at 9:44 am

Thank you for a great article. I represent a 20+ unit of take-out and delivery only pizza restaurants. We transact over 100% of our net sales in credit/debit cards. (Tips). Currently we are are being held hostage by our POS company with a single processor interface. We would have to pay for programing to be able to interface with a new payment processor. Currently we transact in excess of $19m in credit/debit cards annually and are paying an effective overall percent of just under 4%. Most of our transactions are either online or over the phone without the card in hand. We have VERY LITTLE chargebacks however we are being told that our % is so high due to “Downgrading”. With our size (& we are growing) and $ amount of transactions is there a way to put this out to bid and have the winning processor pay for the needed programing?

This comment refers to an earlier version of this post and may be outdated.

Emily Hale December 2, 2019 at 12:22 pm

Hi Charles,

Thanks for your question! We hope to provide some insight and give you some really good options so that you can find a better solution than what you have right now. As far as programming, you’ll find that it’s almost always on the merchant to handle all the details including coding, programming and integrating solutions. Next, while it’s true that a card-not-present transaction taken over the phone is going to cost more than a card-present sale, you still should be able to find a better rate than that 4%. It’s high considering your industry and high volume of sales. We suggest switching your POS and finding one that supports more than one type of processor, or comes with an in-house processor with a nice flat rate. Revel might be an option to consider. Also, here is our post on the Best POS Systems for Pizza Parlors that will give you some more ideas, too. If you want to take a look at your payment processor alternatives, we suggest looking at National Processing or Payment Depot. You’d likely find a better pricing structure here, and you’d probably have no problem finding a compatible POS system with their help. Hope this clears some things up for you, and best of luck!

This comment refers to an earlier version of this post and may be outdated.

Mark Lewis January 17, 2020 at 1:26 pm

Look at Franchise Payments Network
Amazing company and great loyalty program as well

This comment refers to an earlier version of this post and may be outdated.

Brandon Shapiro November 20, 2019 at 12:20 pm

Read the article a couple times and still a little lost. In a generic point of view what would be the right direct for a Hardscaping business where transactions #’s are lower but $ per is higher. I believe it would fall under markup but still not sure.

This comment refers to an earlier version of this post and may be outdated.

Melissa Johnson November 21, 2019 at 11:47 am

Hi, Brandon!

You’re always going to have to pay interchange fees; those are unavoidable. It comes down to the markup — flat-rate pricing lumps the two together so you can’t tell what is interchange and what is markup. Tiered pricing is the same way but it’s a lot less consistent. Interchange-plus and subscription pricing will separate the two out for you.

Because you have fewer transactions but a higher transaction size, you’re not going to be affected by per-transaction fees the way a coffee shop (where the average transaction size might only be $5-$10) would be. However, it comes down to your volume — if you’re doing a high volume of transactions ($10k/month or more), a company like Payment Depot with its subscription pricing is a good fit. If you’re doing a lower volume, you might do better with flat-rate pricing or interchange-plus. CDGcommerce might also be a good fit for you, or National Processing.

Hope this helps!

This comment refers to an earlier version of this post and may be outdated.

Tom Reeves November 11, 2019 at 6:49 am

Can you comment on the firm(s) that offer credit card ‘cost reduction services’. Their business model is to work on the behalf of a business to reduce effective credit card fees, in exchange they keep half the savings over a 2 year contract term. Aren’t they thereby motivated to keep a business with an expensive provider / save money and split savings rather than actually move the business to a lower cost credit card processor ?

This comment refers to an earlier version of this post and may be outdated.

Amad Ebrahimi November 11, 2019 at 12:22 pm

Hi Tom,

Great question! Generally, I would say yes they are incentivized to renegotiate with your current processor, rather than moving you to a new processor. With that said, some of these consultants also have partnerships with those lower-cost processors so even if they move you, they will still get some sort of monetary compensation in the form of a residual split of your account earnings.

This comment refers to an earlier version of this post and may be outdated.

lucknow to kannauj November 6, 2019 at 12:46 am

I’d like to find out more? I’d want to find out some additional information.

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Emily Hale November 11, 2019 at 10:49 am

Hello and thanks for your comment. What sort of information are you looking to find? I’d love to point you in the right direction.

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Unwanteduk November 4, 2019 at 10:20 pm

Good Job! This is an awesome post. I couldn’t find it anywhere on google.

This comment refers to an earlier version of this post and may be outdated.

John November 3, 2019 at 1:33 am

This is good information but biased against Square. I am not suggesting that anyone use Square but it is good for some low ticket merchants. However, the “markup” you show for Square in the examples INCLUDES interchange fee and assessments so it is not a markup but rather the overall cost. It looks MUCH higher than the other processors because the other examples are truly just the markups and do not include interchange and assessments. If you add those fees so that the examples are comparing apples to apples, Square is a much better option.

This comment refers to an earlier version of this post and may be outdated.

John October 17, 2019 at 2:02 am

I have a question regarding “declines” or failed charge attempts. How, if at all, does IC pricing work for an attempted charge that failed. We can use the example of a $10 order. Thanks for the help.

This comment refers to an earlier version of this post and may be outdated.

Emily Hale October 18, 2019 at 12:03 pm

Hi John,

This one can be a little tricky. While you won’t be charged interchange fees or markups from your merchant account provider, you could still expect authorization fees from the backend processor and the card brand itself to be passed through to you. They should be very small, but because interchange plus has this inherent pass-through pricing model, you could expect those in the case of a failed charge. Hope this helps!

This comment refers to an earlier version of this post and may be outdated.

Donny N September 27, 2019 at 11:56 pm

Very Nice information! Appreciate it.
My salon does about 530 transactions per month, 10k credits and 20k in debits, average tickets $56. What should I look for in terms of merchant? Also would taking debits with pins be less fees for me?

This comment refers to an earlier version of this post and may be outdated.

Emily Hale September 30, 2019 at 6:41 am

Hi Donny,

Thank you for your comment! I have a post that should clear some of your questions up as far as the cost of debit vs. credit card transactions. Check out The True Cost of Debit Card Transactions. The other post that may help is Top 4 POS Systems For Salons And Spas. You can explore options that cover processing, booking, and more from this post . Hope this helps and best of luck!

This comment refers to an earlier version of this post and may be outdated.

Vineet Kayal September 17, 2019 at 3:05 am

Very simple and clearly explained. Thank you very much. I am sure a lots of people have gained insight into
This maze, and have chosen “wisely”now.
Highly recommend every small business to ‘READ AND UNDERSTAND”.
I will forward this to many of my friends and family who Iam sure can use this information.

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David September 11, 2019 at 12:22 pm

Hello,
My business will be a web based retail with projected monthly sales between 1500 to 2000 at around $15 per sale. What would the preferred method/company for credit card processing.

Thanks
David

This comment refers to an earlier version of this post and may be outdated.

Emily Hale September 12, 2019 at 7:36 am

Hi, David!

Being a lower volume business, I’d suggest that you take a look at Square. However, I definitely recommend comparing more than one option to understand how fees impact your bottom line. Take a look at our post, Best Online Credit Card Processors and find some of our top picks with a lot of information to get you started. Hope this helps and best of luck!

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Fred September 11, 2019 at 8:39 am

Hello,

Can an ISO charge additional fees if a merchant has been identified and fined for a card brand chargeback program?

Example: Merchant A has been fined by Visa for excessive Chargebacks for 3 months and has been fined by the card brands. In addition, the payments company that merchant A processes payments through is adding on an additional fee.

Is that allowed?

Thanks in advance for your thoughts.

This comment refers to an earlier version of this post and may be outdated.

Emily Hale September 11, 2019 at 10:34 am

Hi Fred,

Yes, unfortunately it’s something that is common practice. That’s because the processor also must spend the resources in handling and mitigating a chargeback. You’ll find the specific charges related to any chargeback laid out in the contract of your merchant agreement. We recommend referring back and taking note of the additional charges to expect when that happens. Hope that helps and best of luck.

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Rick Lan June 12, 2019 at 5:10 pm

Hello: A bit of help: we process CARD NOT PRESENT, about $25,000 month on average, with each transaction being about $5,000 (we are a design firm that charges for design services). Any initial thoughts on which processor to use? TY!

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Dakota Fillet June 28, 2019 at 3:55 pm

Hi Rick, You would probably want to look into one of our full-service merchant account providers like Dharma or Payment Depot. You may want to look at our Merchant Accounts Comparison Chart to see which would best fit your needs. Best of luck!

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Zoe May 29, 2019 at 11:11 am

Hi,

Thank you for this helpful information. Are interchange fees the same or differenta s credit card surcharge fees? Would they be considered one and the same in states that don’t allow credit card surcharging fee?

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Jessica Dinsmore June 10, 2019 at 2:42 pm

Hi Zoe,

I think you’ll find all the answers to your questions (and then some!) here in our Complete Guide To Credit Card Surcharges. I hope that helps!

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Michael May 2, 2019 at 5:47 am

How is Paypal dealing with these charges? They used to be the most affordable payment processing service providers but at some point they started introducing fees, even for transferring from one paypal account to another one. Does anyone know other providers that still offer attractive rates (at least to SMBs)?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore May 8, 2019 at 11:24 am

Hi Michael,

You might want to take a look at Square– they charge fewer fees than paypal, overall. If that’s not quite what you are looking for, I’d suggest our top-rated provider comparison to help you decide.

This comment refers to an earlier version of this post and may be outdated.

John Marchiony April 12, 2019 at 2:05 pm

I’m wondering what the national average is for interchange across all V/MC/D cards. I found another site that unequivocally says “1.81%.” Can you confirm that’s correct (or at least reasonable) or provide an alternative with any source? This will help me tremendously in projecting expenses when comparing an offer on a pass-through model vs. tiered pricing. Thanks very much!

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore April 15, 2019 at 11:54 am

Hi John!

Unfortunately tiered pricing makes this calculation intentionally difficult, and comparison’s are virtually impossible. We do have a post on interchange fees that may be helpful in making your own estimations. Good luck!

This comment refers to an earlier version of this post and may be outdated.

Mathew April 11, 2019 at 10:41 am

Hi,

I’m doing an Convenience Store business
Sales from $1.00 to $25.00
Volume credit and debit around $1400 per day, 300 to 350 transaction each day.
What’s your recommendation.

Thank you,

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore April 23, 2019 at 2:27 pm

Hi Matthew,

I’d suggest taking a look at our Credit Card Processor Comparison Chart to see which one you think might best suit your business needs. My hunch is that Payment Depot would be a good fit.

This comment refers to an earlier version of this post and may be outdated.

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Doug March 14, 2019 at 9:34 am

I would like to run a shuttle service in the Caribbean, about 2000 tickets / mo, 40 USD / ticket. I would like to be able to accept online and in person payments from different currencies. What is your advice?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore April 5, 2019 at 11:53 am

Hi Doug,

I’d guess Durango would be your best option for offshore processing. They can process in person and eCommerce transactions, and they are one of our top rated high-risk processors. You should reach out to them and see if they can accommodate the currencies you plan on accepting. Good luck!

This comment refers to an earlier version of this post and may be outdated.

Adam March 11, 2019 at 9:48 pm

Love the article! It’s helped answer a lot of my questions.

However, I’m really confused how you get $23 for Square with 500 x $15 transactions.

2.75% of $15 = $0.4125
$0.4125 x 500 = 206.25

Or are you saying that it’s $23 above whatever you would pay for Interchange normally?
From what I’m seeing with most Interchange-Plus models, the final cost depends entirely on the ratio of debit to credit cards being used since debit is so much less. Is that accurate?

I have 250 x $50 transactions per month. So it seems like Payline would be a good option, yes?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 29, 2019 at 11:07 am

Hi Adam,

The reference is to $23 above interchange using averages. The results will vary depending on what cards the customers use. Though, at your monthly processing volume, you may want to get a quote from any of our preferred providers. Happy reading! And good luck!

This comment refers to an earlier version of this post and may be outdated.

tony March 7, 2019 at 8:09 pm

I think I am getting more and more confused. What would you recommend for a golf course in Canada. Open 6-7 months, $400k to $500k credit and debit cards. A terminal in pro shop, one in lounge and one wireless on the course,
thank you!!!

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 13, 2019 at 11:13 am

Hi Tony,

I think this article on Canadian processors may be really helpful for you. It sounds like National Processing may be your best bet- I’d suggest giving them a call to see if they are a good fit.

This comment refers to an earlier version of this post and may be outdated.

AMO February 22, 2019 at 7:07 am

Who would you suggest for a restaurant with 3.5 million in annual sales? Average ticket is about $40-$50. We currently currently use Worldpay Integrated/Vantiv. Use Positouch POS system.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 5, 2019 at 2:22 pm

Hi AMO,

At that processing volume, almost all of our recommended processors will give you custom pricing and probably match rate quotes from other providers. I’d say Dharma is probably your best bet due to their high overall quality of service.

This comment refers to an earlier version of this post and may be outdated.

Dawn Diehl February 14, 2019 at 9:26 am

Hey there! We are a new business. We offer massage, waxing and skincare. We will also be selling retail. We are using an all in one spa software that integrate with EVO. I am sure we will be processing about 5000 per day and each ticket will range from $15- $400+. How do I know what to ask for in a processor?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore February 26, 2019 at 12:45 pm

Hi Dawn,

I’d suggest downloading our free eBook The Beginner’s Guide To Payment Processing.

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Scott February 4, 2019 at 4:43 pm

Great read. If we process a small quantity of transactions but each transaction is on average 2k per transaction (with ideally 1.2 million or more in sales per year), any thoughts on payment depot vs fattmerchant? We don’t need e-commerce and potentially want a solution for re-occurring payments.

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Jessica Dinsmore February 25, 2019 at 3:24 pm

Hi Scott,

Both Fattmerchant and Payment Depot include support for recurring billing through their payment gateways. Pricing for both companies is about the same, and they both offer subscription-based pricing plans that are based on the merchant’s actual monthly processing volume. Either one would be a good choice, although it’s likely that Fattmerchant might be a little less expensive overall.

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Ashley Sawdon January 23, 2019 at 12:55 pm

Great information!!! Thank you for sharing!!!

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Rosette January 18, 2019 at 6:19 pm

Hi i feel i finally found a site to help me understand finally what it means with banking fees. I began trying to research POS systems as I know nothing about them or even if i am being taken for a ride.
This leads me to wonder If my banking institution is the best one to go with. I really would like a pos system that simplifies my bookeeping as i am totally knew at this and am afraid of letting things just go by due to my lack of knowledge, but as i said i know nothing and need advice as to what is the best one to go with. I am in talks with a company called touch bistro which after reading all the info on all the different entities involved, my guess is that touch bistro is infact an aquirer? I will betalking to them to find out a little more but if you have any insight into whether it is a wise decision then it would be greatly appreciated. I am using square as of now but with the 2.75 % interest flat rate i wonder if its the best option. I would really like to convert totally to a pos system and before deciding i need to know what to do. thank you

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore February 14, 2019 at 10:49 am

Hi Rosette!

We are so happy you’re finding our website to be helpful! We love kudos!

TouchBistro and Square are both good options for a POS system. The nice thing about TouchBistro is that they are integrated with lots of processors. If you go to the payment processing section of their website, you’ll find a list that allows you to compare each processor’s rates and, depending on your sales, figure out which is the best company for you. Square tends to be fairly competitive unless you’re selling a very high volume in which case I would suggest looking elsewhere. And, as you’ll see, TouchBistro integrates with Square as well so you could go with TouchBistro POS and not have to change your processor.

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Carol OConnor-Zeinz January 3, 2019 at 1:30 pm

I used to have payline – the customer service was not good. At least, not to me. I now have Merchantone.

these are the current fees –

Debit Rate: 0.29%
Qualified Rate: 1.55%
Transaction Fee: $0.19
Monthly Service Fee: $6.50

No Setup Fee
No PCI Compliance Fee
No Batch Fees
Next-Business Day Funding

I just noticed that I am being charged a $99 annual fee –

What’s your opinion or review of Merchantone?

Carol

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 3, 2019 at 2:18 pm

Hi Carol,

We’ve actually already completed a comprehensive review of Merchant One. It’s definitely not one of our top contenders. Take a look!

This comment refers to an earlier version of this post and may be outdated.

Jay December 22, 2018 at 4:53 am

Please provide info for suitable c-store w/ gas business
Sales from $1.00 to $25.00
Volume credit and debit $39000 approx
Thanks

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 3, 2019 at 10:45 am

Hi Jay,

At your processing volume, you’d be in good hands with CDGcommerce or Dharma. All the best!

This comment refers to an earlier version of this post and may be outdated.

Colton RIckard December 21, 2018 at 12:12 pm

Hi!

Thanks for all of the useful information – this article has been very helpful! I am having difficulty finding a reputable, low-cost Merchant Account Provider that will work with a “high risk” customer. I am opening an online store to sell smoking accessories/etc that is automatically categorized in the “high risk” category. This means I cannot work with many payment processors, such as Shopify. I have collected some quotes from providers who work with high risk clients, and I am having trouble deciphering which is the best. Most are set on tiers – which is undesirable.

Do you all have any suggestions for Merchant Account Providers who will work with those in my industry?

Thanks!!

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 3, 2019 at 10:31 am

Hi Colton,

Unfortunately, high-risk and low-cost doesn’t really exist, however… there ARE reputable high-risk merchant account providers out there. I’d suggest taking a look at Durango and maybe SMB Global. We rate both of them highly. You can compare them and check out our reviews of them here. Hope that helps!

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Jay October 29, 2018 at 8:09 am

Looking for advice… we process high dollar transactions totaling about $1 million per year. What processing companies would you recommend? Thanks.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore November 19, 2018 at 1:20 pm

Hi Jay!

If your processing volume is consistent throughout the year, that works out to about $83.3K per month, which may meet the threshold for custom pricing with some providers. The threshold varies from one provider to another; some offer it at $80K per month, while others require a minimum of $100K per month. In any event, with your sales volume, you should be able to get some really good rates from any of our preferred providers.

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CR October 20, 2018 at 10:08 pm

I am just starting a small business that will offer wholesale and consumer retail sales. I will also have Amazon. Most products are under $20. It is all done ecommerce. What is your suggestion for my situation?

Thanks

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore November 19, 2018 at 11:32 am

Hi CR!

I’d suggest giving Shopify a look. They offer a highly integrated platform with lots of room for growth! Best of luck!

This comment refers to an earlier version of this post and may be outdated.

Blair September 16, 2018 at 11:21 am

I had signed up with an account manager at citibank 3.5 years ago and they use first data. Originally they didn’t use clover but something else and I was using that for a year and then they switched me to clover go. I just discovered that about 5 statements in the beginning were completely wrong in what I submitted and even what was deposited into my bank account and I am very concerned about this. Luckily I received my money but the statements end up saying I didn’t receive $5000 for the year. I am also incredibly confused by the recent statements as they don’t start and end on the 1st and end of the month so charges are added on to the next month making it insanely difficult to track. I am signed up with business track from them and just got a daily summary in my email that has the complete wrong summary for yesterday but the clover dashboard has the correct info.
I am receiving a flat rate of 2.29% and $9.99 per month for the service. I was told this meant no interchange fees and yet I have tons of them.. I don’t have leasing fees or anything either. I am submitting between $9000 to close to $12000 a month. I need to save as much money as possible with using credit cards. I don’t need inventory or anything fancy as it is just me and I provide a service not products. For me, what is the best company to use in terms of lowest all around cost for the month, most reliable, best customer service? I am so concerned and confused. Thanks for your help!

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore October 12, 2018 at 2:31 pm

Hi Blair!

Thank you so much for reaching out. It’s difficult for us to make a recommendation without knowing your industry or how you typically accept payments, etc. If you’d like to try our filtering tool, it can help you narrow down options specific to your business. You may also want to read over our review of First Data. If you’d like to send us an email with more details we’ll be happy to help! We can be reached at service@merchantmaverick.com.

This comment refers to an earlier version of this post and may be outdated.

Angela September 3, 2018 at 3:25 am

Thank you very much for your expertise on this subject. I will soon be managing a small gym and am interested in saving money any way I can. Here is my question:
I am currently using PayPal for clients on a month to month, 3 month, 6 month, and yearly renewal. We are a small gym with about 50 members. What would be the best strategy for me going forward? I want to get away from pay pal. Thank you

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore September 24, 2018 at 12:50 pm

Hi Angela!

Fattmerchant has great recurring billing and customer management tools that will probably be a good fit here. If for some reason, you are denied, let us know and we’ll see if we can offer a different suggestion. Good luck with your new gym!

This comment refers to an earlier version of this post and may be outdated.

Bart August 10, 2018 at 7:25 am

Can you please advise which charges are reversed to the acquirer for a refund transaction?

When a consumer returns goods to my online shop, we issue a refund transaction. The issuers return the interchange to the acquirer, so I should get that credited by my acquirer. However what happens with the card association fees? Are they reversed, only charged at original transaction or does the acquirer get charged twice, once for the original trx and once for the refund trx??
Thank you! Bart

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore August 16, 2018 at 1:40 pm

Hi Bart,

Great question. The percentage card assessment fees are charged on all original sales, and are NOT refunded. However, the assessment fees are NOT charged on the refund. So end of the day, the merchant will always pay the % component of assessment fees on the GROSS sales volume, not the NET.

The per-transaction card brand fees, however, apply to ALL transactions, be they sales or refunds. So you’ll see separate line items for the Visa APF Credit/Debit fees – credit sales, debit sales, credit refunds, debit refunds. Same deal with MasterCard – since they don’t differentiate by credit/debit, you’ll see a NABU line item for sales, and for refunds.

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Tito Bravo July 19, 2018 at 9:09 am

Is the transaction flow different for Amex vs other bank card transactions?

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Jessica Dinsmore August 15, 2018 at 1:28 pm

Hi Tito,

Take a look at our credit card processing article on American Express. Good luck to you!

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Mike July 10, 2018 at 10:06 pm

Hi,

Great website. Lots of helpful info.

I have an ecommerce only site and I am running currently about $9000 per month in CC sales. My last statement my processing charges were $335 and the fee was $73, total cost was 4.4% of total sales. Is this too high or about right for an ecommerce site? There were about 200 transactions. My statement is so confusing, hard to read for someone not versed in this stuff, probably by design.

Thanks!

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Jessica Dinsmore July 11, 2018 at 11:58 am

Hi Mike,

That is approximately what we’d expect to see. You could probably save a bit of money with a company like CDGcommerce, but it might not be a huge difference.

This comment refers to an earlier version of this post and may be outdated.

Tony June 20, 2018 at 6:53 pm

I have a legal question. My partner works for a business that just signed up for a new credit card processing system. Hardware, software and such. They also claim that the card company will charge the processing fee directly to the customer without their knowledge, increasing the business’ bottom line.
Is this legal?

Thank you
TonyD

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone June 24, 2018 at 8:46 am

Hi Tony,

No, that would not be legal or possible. There are strict rules regarding surcharging. It is much safer to just increase your prices across the board and then offer a discount for those who pay in cash. This is legal in all states but appropriate signage must be displayed. National Processing can help you get that set up if you end up switching providers.

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Dee June 7, 2018 at 4:25 pm

Do you get charged for repetitive swiping if you are having trouble getting a good read from the card reader? Or are you charged only on a successful confirmed swipe?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 28, 2018 at 11:46 am

Hi Dee,

If the card reader can’t read the card it can’t initiate the transaction. So as long as the card reader doesn’t read the card, you’ll only be charged on a successful transaction. Glitches can happen on the bank’s end though, and if you swipe it and the card reader picks up the data and the app times out or otherwise has a glitch you could run into extra authorizations.

This comment refers to an earlier version of this post and may be outdated.

Cindy May 23, 2018 at 12:17 pm

$1.92M in credit cards payment, average ticket is $105. I am currently paying .16% +$ .02 for MC/VISA/discover/PayPal debit and credit. .18% + $.10 for America Express. Are these good rates?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 23, 2018 at 7:35 am

Hi Cindy,

Rate questions are always complicated so I can’t say for sure, but generally speaking yes that’s a good rate at that volume.

This comment refers to an earlier version of this post and may be outdated.

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Mike May 8, 2018 at 9:35 am

I’m not sure if it has been mentioned but I’ve been hearing about a “cash discount program “offered where a business states a cash discount for there product and then the customer if they choose to use a credit card absorbs the fee . Any info on this at all ?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore May 30, 2018 at 3:27 pm

Hi Mike,

There are rules that discourage aggressive promotion of cash use over credit card. Take a look at this Guide to Credit Card Surcharges; I think it will help answer your questions.

This comment refers to an earlier version of this post and may be outdated.

chris April 18, 2018 at 4:24 pm

Assuming an average fee of 2% per CNP transaction, this means that CC-merchants put a one billion dollar burden on commerce inside of the US. Virtual currencies will hopefully put an end to that shortly. – There is no (technical) reason for that (anymore). You don’t put a stamp on your emails – right?

This comment refers to an earlier version of this post and may be outdated.

Andrea April 5, 2018 at 2:50 pm

Hi, I’m starting a new business and I was discussing credit card processing with my bank. They told me about a new service from Transfirst called Transfreedom and the pricing model is based on total dollar volume of transactions per month as well as average ticket value. Like you mentioned, it’s nearly impossible (for me) to compare with other pricing models. For example, 2,500 in cc sales a month costs 79.00 and 5,000 costs 129.00. This seems high to me… My business will likely have lots of relatively low value sales. What do you think?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore April 6, 2018 at 1:57 pm

Hi Andrea,

First, I’d recommend you read our review of Transfirst and be sure to read through the part about Transfreedom. I’d also recommend you read our post Should You Open a Merchant Account With Your Bank?. I think we have some better-suited options for you on our comparison chart, and you may find our filtering tool to be helpful as well.

This comment refers to an earlier version of this post and may be outdated.

Vinod March 28, 2018 at 7:33 am

It would have been good if the above was explained with a transaction example. Please add an example so that it will be more clear.

This comment refers to an earlier version of this post and may be outdated.

bob becker March 12, 2018 at 6:44 pm

hello, some cards give the user extra points at restaurants (such as saphire).
do these cards charge the restaurant extra to cover the cost?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 13, 2018 at 12:43 pm

Hi Bob,

Yes, premium rewards cards do cost businesses more to process, but the business does not cover 100% of the rewards.

This comment refers to an earlier version of this post and may be outdated.

marc March 3, 2018 at 10:20 am

Can anyone advise as to the rules and regulations associated with charging clients (not end consumers) a processing fee when they chose to pay by credit card?

In other words, can a supplier that is selling to a retailer or other “middle man” who in turn sells to end consumers, charge the retailer for paying by credit card as opposed to check or wire transfer?

Thank you for any advice / reference data in this topic?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 7, 2018 at 1:49 pm

Hi Marc,

It really comes down to state-level laws. I’d suggest you start by consulting your state’s laws about credit card surcharges generally, or searching specifically for B2B (business-to-business) credit card surcharges for your state. I hope that is helpful!

This comment refers to an earlier version of this post and may be outdated.

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Bobbie Drew February 23, 2018 at 4:59 pm

Amad, I don’t have a twitter account so I need to ask my question here. I volunteer for a non-profit foundation. We have fund raisers that are paid for strictly by various credit cards. Payments for dinners are made online and auction items are processed on a Clover Credit Card Machine. All Stripe payments minus a fee are sent to our bank. This is ok. I’m confused because I see we pay a fee also to the bank’s Merchant Services which can sometimes really put a dent in our skimpy fund. We are looking for a better option so that our funds can be distributed to the needy, not the bank. We are considering Square in place of charges made on Clover and processing by Merchant services. My question is, “should we get rid of the Clover and cancel the merchant services account? I feel that the foundation is being taken with double fees. What do you think about going keeping Stripe for online charges and Square for auctions on location. I must thank for making this information available.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore March 13, 2018 at 11:04 am

Hi Bobbie!

I don’t have all the information here so I can’t tell you anything definitively. However, I know that in general, Clover and most providers that offer Clover as part of their merchant services have contracts with early termination fees. So unless you’re within the correct window to cancel your account, doing so might cost you a few hundred dollars. Not only that, but your Clover machine may have a lease agreement attached to it, and that may not be a cancel-able lease. So before you do anything, I recommend you call your merchant services provider and ask them about early termination fees and the lease. If they offer better terms when you call, be careful because often these agreements come with a contract renewal. It’s best not to agree to anything.

If you don’t have an ETF and you don’t have to worry about the lease, that’s great! If you do, you can still cancel your service; it’s just going to cost you more than you would like. Even if you just stop using the merchant services until your contract runs out, you’ll likely still be charged monthly fees.

I would recommend that you look at either Square or PayPal for your processing needs. Both allow for online purchases and have a mobile app so you can accept payments in person. PayPal offers nonprofit discounts, so you’ll end up saving a little bit of money. Square offers support for nonprofits as well — no discounts, but their team will help you get set up with whatever you need. In your case, you might also look at using Flint for in-person payments. It’s not the most robust mobile app out there, and it will cost you more than Square or PayPal, but it uses Stripe as its back-end processor so you could still combine all your processing.

This comment refers to an earlier version of this post and may be outdated.

Amyn February 23, 2018 at 8:46 am

E-commerce Payments

This is slightly off topic, but I was wondering if you could help me find the answer. We are accepting e-com transactions via our PSP, which is integrated to a bank’s online acquiring platform. We have a standard set MDR from the bank. However, if our PSP directly integrates with the bank, would this mean that the per transaction rate might go down? keeping in mind that we already have an agreement with our PSP.

Would be great if you could answer this.

Thanks
Amyn

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore February 23, 2018 at 10:56 am

Hi Amyn,

Interesting question! It’s possible that you could leverage your existing relationship with your processor to get a better rate on the PSP transactions. It’s definitely not a sure thing and depends on a lot of factors, but could be worth a try.

This comment refers to an earlier version of this post and may be outdated.

Johnny February 15, 2018 at 9:43 pm

Nice article but there are rates wholesalers out there as well that provide great service and the lowest rates in the industry. You mention First Data but they aren’t the only ones. First Data is owned by KKR who bought it for the largest LBO at the time, $28 billion if I remember correctly, and it recently had a very successful IPO. They are the largest because they have their hand in every possible aspect of credit/debit card services and do a lot of the transaction processing, approval stand-ins, switch services for foreign card transactions and tons of EOD processing for the major financial institutions. The reason they have the relationships with financial institutions is because they had acquired Honor Network (once owned by 13 banks) through their acquisitions of Concord, which had acquired STAR. STAR is now merely a brand they use.

FCS is another wholesaler that offers the same competitive transaction rates as First Data. They just don’t deal with the hardware and processing for financial institutions like First Data. I don’t know the rich history of this company. I didn’t spend 9 1/2 years there like I did at Honor/Star/concord/First Data/KKR

Nice article!

This comment refers to an earlier version of this post and may be outdated.

Michael Spetko January 30, 2018 at 2:10 pm

Regarding PCI fees, for the most part this a cash grab by the processor. Elavon set up an external company for the sole purpose to cash in on . Global is very aggressive, I have seen up to $2,400.00 in just PCI on one statement. Neither Chase or First Data charge any PCI because it’s not required by the Payment Processing Industry. So who is the PCI , have you vere called them or visited their website, notta because they don’t exsist as a company , it’s and industry name and that’s it.
It’s the processor that is compliant and meets the security criteria and standards of Visa & Mastercard .

This comment refers to an earlier version of this post and may be outdated.

Aaron January 29, 2018 at 6:15 am

Thanks so much for this detailed review. Question: I’m just starting a small business. We offer cycling tours and expect a small number of transactions – 10 a month – with each transaction averaging $4,000 to 5,000. What’s the best solution for us?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore February 12, 2018 at 10:03 am

Hi Aaron,
I’d suggest Helcim. Helcim will be good even for months when the dollar volume is low (since Helcim has a very low monthly fee and no minimum), but will provide account stability for large transactions. I hope that helps!

This comment refers to an earlier version of this post and may be outdated.

Jason January 11, 2018 at 9:30 am

I love the information that you have provided. Very detailed and informative. I’m still trying to decipher everything. I have a small business in Central Florida. We only charge less than 2k per month on credit cards. What would you recommend for merchant services. We have been using PayPal but once in a while they hold the money for at least a couple weeks. We were thinking of just using the merchant services of the bank where we have our business account.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 11, 2018 at 10:11 am

Thanks Jason! With your sales volume, Paypal or Square are your best options. You are still subject to account holds, but this article may help you avoid this in the future.

This comment refers to an earlier version of this post and may be outdated.

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Andrew Davison January 10, 2018 at 10:12 am

Can you tell me what the rate should be for a utility company. We just found out that our business should be considered a utility because we deliver home heating oil to consumers. I have heard that we should only be charged a flat rate of 1% but my processor has been charging much more that that.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 10, 2018 at 1:15 pm

Hi Andrew,

Great question! Your question has inspired us to write up an article on this, so stay tuned. In the meantime, our understanding is that a Utility Merchant Account may qualify you for a lower interchange rate, but may not actually affect how much and via which pricing model the processor adds a markup. I’d suggest starting with your current processor to get clarification on your rates. Best of luck!

This comment refers to an earlier version of this post and may be outdated.

Douglass R Scott January 5, 2018 at 11:50 am

I work at a law office in California. We use Sqaure for credit card payments. They charge a certain percentage to use their service. Let’s say that on a $1,000 transaction at a 2% transaction fee is $20. If we charge our client $1,020, Square will then add their transaction fee percentage (2% in the example) increasing the amount above what we charged the client ($1,020 plus 2%). How do we calculate the amount we need to charge the client in the above scenario?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore January 10, 2018 at 1:28 pm

Hi Douglass,

You pose an interesting question! The answer is that for most businesses, 2.75% + (2.75%*2.75%) will be close enough to the right answer. So that’s 2.82776 or about 2.83% for Square.

This comment refers to an earlier version of this post and may be outdated.

Allison Nicole Smith December 26, 2017 at 6:47 am

Hi, I want to learn more about the fees associated with credit card processing, but I’m wondering if the same types of fees apply to both merchant account providers and third-party payment aggregators.

For example, if I’m more interested in an aggregator, do I still need to consider pricing models (Interchange Plus, Tiered, Flat Rate) when choosing an aggregator?

Essentially, what I’m asking is if all the credit card processing fees described in this article pertain to aggregator providers also, or only traditional merchant accounts? If not, what are the fees those using an aggregator (such as Square or PayPal) need to think about? Thanks!

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone December 28, 2017 at 2:10 pm

Hi Allison,

While aggregators are free to charge whatever fees they’d like to, most blend all account costs into the padded processing rate (often 2.9% + $0.30 for ecommerce). Interchange-plus isn’t likely to be an option for an aggregator account. It’s also unusual to see an aggregator charge fees for PCI compliance or a monthly minimum or an early termination fee, for instance, but it’s not impossible. Chargeback fees and non-sufficient funds charges are common for aggregator accounts, though, when these events occur.

Most aggregators are very good at providing simple pricing without hidden fees. Square is a great example of this. It sometimes ends up being more expensive than an interchange-plus merchant account, but for some the predictable and simple pricing is very attractive.

This comment refers to an earlier version of this post and may be outdated.

Cole November 20, 2017 at 10:01 am

We are a medical practice looking for a more transparent, low rate credit card processor for relatively low # of transactions and high transaction value. We are above the >$1MM/year in credit card payments bracket, and our payments range from a few hundred dollars to over $10K. So the lower the effective rate, the better. That being said, we don’t want to sacrifice security, customer service or legitimacy. We want to work with the most reputable companies out there who are used to dealing with large annual volumes.

We’re considering Paypal, Stripe, Payment Depot, Kickfin, Transparent, Payfirma, Fatt Merchant, Helcim, and Payline Data, but it’s still somewhat confusing. Currently, we are with Chase, and we like that they are a legitimate business. It’s hard to tell just on the internet who’s sketchy and who’s reputable. Any feedback is appreciated.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore December 7, 2017 at 1:50 pm

Cole,
I see that you’re pretty happy with Chase, so I’m wondering why you want to switch? If you think you can get better rates elsewhere, it might make more sense to just renegotiate with Chase. Here are a couple articles that might be helpful:

https://www.merchantmaverick.com/how-to-negotiate-the-perfect-credit-card-processing-deal/

https://www.merchantmaverick.com/how-much-should-you-pay-for-credit-card-processing/

If after you renegotiate with Chase, you still want to change, let me know and I’ll work with you to find another processor.

This comment refers to an earlier version of this post and may be outdated.

Michael Spetko January 30, 2018 at 2:14 pm

Is never about the rate, thats a myth because Visa & Mastercard don’t discriminate between Walmart and any other business. It’s all about how they charge, Flat Rate, Interchange Differential or Cost Plus. Cost Plus is what all the big box stores have and any business qualifies , you just have to find a processor that will agree to charge you that way and many won’t because it’s a very corrupt industry.

This comment refers to an earlier version of this post and may be outdated.

Rich November 11, 2017 at 3:59 pm

Great info here…thank you!
I have 2 customers that are asking to make VCC payments.
They are both multi billion dollar companies, what are the rates I should expect to pay for (6) invoices a month ranging between $3,000 and $50,000? and what type of payment is that considered to be?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore November 20, 2017 at 1:03 pm

Hi Rich,
It depends on the type of account the virtual card is connected to and the brand of the card. It will likely be processed as some variety of B2B card-not-present transaction. You’ll need to consult the published interchange rates and then tack on card brand fees and your processor’s markup. No simple answer to this unfortunately. Best of luck!

This comment refers to an earlier version of this post and may be outdated.

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Mike November 1, 2017 at 8:00 am

Great article. I have a business with 2 locations. Each location processes about 100,000 a month in credit card transactions. Each transaction averages $75. We want the credit card processor to use our existing POS hardware, so Square wouldn’t work. What processor do you recommend? What pricing model do you recommend? Thank you

This comment refers to an earlier version of this post and may be outdated.

Amad Ebrahimi November 16, 2017 at 1:44 pm

Hi Mike,

Can you tell me which POS hardware/software combo you’re using? Before we can make a recommendation, I need to know if the processor will integrate.

This comment refers to an earlier version of this post and may be outdated.

Isaac October 31, 2017 at 10:11 am

We run an average of 4500 transactions per month totaling around $500,000-$600,000. With our current processor our rates are interchange + .20% + $0.07 per transaction. We recently got a quote from a larger(?) “broker” processing company for interchange + .10% + $0.10 per transaction. The advantage to going with the second processor is that they offer a payment gateway and secure data server for recurring payments and adjustments, which is important to us.

Would you consider these good rates for a company at our size? If not, any recommendations or suggestions would be much appreciated.

Also curious as to why we shouldn’t go directly with one of the larger processors that do the processing themselves as opposed to the more abundantly available “broker” merchant processors. What are the pros and cons to each?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore October 31, 2017 at 2:03 pm

Hi Isaac,

I actually think you can do better than that! You can probably get 0%-.5% + $.10 per transaction with Helcim. I recommend you download our ebook and read through section 3 for an explanation to your last question.

This comment refers to an earlier version of this post and may be outdated.

Isaac October 31, 2017 at 5:18 pm

We are seriously considering moving forward with Payment Depot’s premier program which is 0% + $.05 per transaction. We just need to confirm a few things with Authorize.net regarding their payment page and customer information manager (CIM). How does Payment Depot compare to Helcim? Is there one you would recommend over the other?

Thanks for the helpful info Jessica!

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore November 10, 2017 at 3:20 pm

Hi Isaac,

We rate both vendors with 5/5 stars, so they are both excellent choices. You can check out our reviews of Helcim and Payment Depot here. I’d also suggest giving our filtering tool a try to see if either one makes more sense for your specific business needs.

This comment refers to an earlier version of this post and may be outdated.

Chad April 4, 2018 at 10:11 am

Hi Isaac,
If you are processing B2B/Card Not Present transactions and using Auth.net you need to make more consideration towards the level of Interchange you are achieving. Especially if you are taking a large number of Purchasing, Business, or Corporate cards. I have been in the B2B and Card Not Present industry for over 10 years and there is a huge difference in the “discount rate” and processing effectively to achieve Level 2/3 interchange. If interested I would love to talk.
Thank you,
Chad

This comment refers to an earlier version of this post and may be outdated.

Donald D. Joyce October 26, 2017 at 6:19 am

I run 20,000 or more a month.
I pay 3.25 procent.
Is this good?🤤

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore October 26, 2017 at 1:28 pm

Donald,

Your rates are definitely higher than average. Whether you’re processing cards in person or online, you’re paying too much. I recommend you take a look at our comparison chart and find a provider that charges less for your particular type of business.

This comment refers to an earlier version of this post and may be outdated.

Michael Spetko March 22, 2018 at 9:53 pm

Donald no that’s very high.

This comment refers to an earlier version of this post and may be outdated.

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Bill Roland September 7, 2017 at 9:10 am

Hello, I recently looked at Toast POS and was quoted a rate of 2.49% + .15c per swipe. Toast forces you to use them for the merchant services. I an curious what amount of those charges Toast retains? The sales rep stated they use Vantiv so I assume Vantiv pays the Visa/MC/AMEX fees. I presently pay around 2.3% based on our volumn. Thanks

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone October 13, 2017 at 1:54 pm

Hi Bill,

One of the problems with tiered or blended rates is that it’s impossible to tell where the fees are going. If Toast has a markup on it, it’s likely very small. More likely, Toast just gets a residual or signing bonus for each account it sets up. Vantiv likely gets the bulk of the profit.

This comment refers to an earlier version of this post and may be outdated.

shihan August 30, 2017 at 3:12 am

On issuer perspective, is Mastercard allow to have mark-up?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore August 30, 2017 at 12:41 pm

I’m not sure if they’re allowed to have a markup or not, but since they set interchange-rates, they can increase or decrease them as they see fit, so technically an increase in base interchange rates would be a “markup” for Mastercard.

This comment refers to an earlier version of this post and may be outdated.

Rebecca Schulz August 24, 2017 at 6:03 pm

I have been approached by Small Business Alliance Group that has claimed to save me money on merchant services. I still question if they are valid and honest in their claims. Are you familiar with the company?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore August 30, 2017 at 1:36 pm

Rebecca,

Unfortunately, we have not reviewed the Small Business Alliance Group, so we can’t confidently give an assessment one way or the other.

This comment refers to an earlier version of this post and may be outdated.

Tiffany Newman August 18, 2017 at 6:23 am

As a merchant in the US Region, can I charge a clientele a surcharge when the business resides in Canada? If so, where is that information available i.e. Attorney General website, etc.

Thank you,
Tiffany

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore August 18, 2017 at 12:20 pm

Tiffany,

Unfortunately, this is an area that we’re not experienced in. We do have an article about surcharges, but not specifically for surcharging a Canadian consumer

This comment refers to an earlier version of this post and may be outdated.

Dan Farrell July 21, 2017 at 10:12 am

I have a question my merchant charged a order on my a/e card one day early before my closing date. Problem is the 40k charge posted on my Accout to pay this month since it was charged on the last day … now my merchant wants to charge me 1200.00 extra if they credit my card back. And re charge it 3 days later so the charge hits the next billing system. Why would a/e charge twice don’t the give the merchant a credit back on the charge if no sale was made ?

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone July 21, 2017 at 2:25 pm

Hi Dan,

The short answer is no, AmEx does not refund the transaction fee to merchants. It’s one of the dangers of AmEx. AmEx only allows merchants to get a refund on the transaction if the merchant agrees to pay a sizeable surcharge on its gross transaction volume. Understandably, most merchants do not agree to this.

This comment refers to an earlier version of this post and may be outdated.

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Lewis Eigen July 13, 2017 at 3:45 pm

Best explanation of a sleazy industry I have seen. Anyone contemplating collecting money through credit cards should read this before choosing vendors.

It has also made me a big fan of Apple, Google and Amazon who are breaking into the payments business and will break the backs of the existing people taking huge advantage of all of us.

This comment refers to an earlier version of this post and may be outdated.

andre_s July 11, 2017 at 3:35 pm

Hi, great info.
1st Question: Is there a state law (Florida) which gives the customer the right to terminate a merchant account without having to pay the early termination fee in case of increase of merchant monthly fee?

2nd
My merchant is jacking up fees with almost each statement ending with the sentence “… if i continue to process cards with them after 30 days i accept those changes in fees… ”
What is the legal consequence of not consenting?

Any ideas, thank you

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore July 12, 2017 at 12:15 pm

Andre, I think this would be best answered by a lawyer because unfortunately our expertise about contract law is very limited and we don’t want to offer advice that we may not be qualified to give.

This comment refers to an earlier version of this post and may be outdated.

Vickie Petz July 5, 2017 at 3:29 pm

Thank you for the helpful info on fees charged. My situation is that I had canceled my service with one credit card processor in Jan 2017, after my contract had expired, yet they continue to charge my account. I was charged 21.00 in April with the explanation that it was a fee from Mastercard and Visa for using their services. Again July 5 2017 with the same explanation, but they saw that my account was canceled in Jan. What can I do to get rid of this company and these fees? Thank you for your quick response.
Vickie Petz

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore July 6, 2017 at 12:27 pm

These situations are always tough to hear about because unfortunately there isn’t much we can do. If you didn’t get a copy of any sort of document that shows your account was closed, then that’s the first thing I would do. If you continue getting charged, then continue calling your processor until they finally stop the withdrawals. If they don’t stop, file a complaint with the Better Business Bureau.

This comment refers to an earlier version of this post and may be outdated.

Christine June 26, 2017 at 4:04 pm

I just switched providers and the broker stated in an email to me that should I be charged liquidate damages with my current provider (based on the remaining months of my contract) and if I decide to stay with my current provider because of this, that she will cancel my agreement without me incurring any charges or cancellation fees. I am now worried because I have not heard anything back from my current provided after cancelling the contract, even though I left messages. I’m thinking they may go ahead and charge the liquidate charges without consultation. Please advise.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 27, 2017 at 10:19 am

Christine, it’s not uncommon for provider’s to charge the liquidated damages fee without first consulting you about it. Unfortunately, your only recourse in this case is to continue trying to get a hold of your current provider. Keep calling, keep emailing, send them a Tweet, etc… Whatever you need to do get them on the phone. The squeaky wheel gets the grease. 😉

This comment refers to an earlier version of this post and may be outdated.

Frank Alexing June 5, 2017 at 10:08 am

Processing with terminal, CLOVER. terminal is sophisticated. Our rates seem high but I will put it to you. Bill this last month, MAY 2017, $658.97 on $18,071.40. We take all cards. Our gross margin is less than 50% with an art gallery and therefore I need to know if this rate sounds fair enough. It is always a big challenge and hassle to switch a company. I have been cc processing since the early 80’s and have paid hundreds of thousands of dollars to process. Thank you for your time and this informational site.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 15, 2017 at 2:07 pm

Great question Frank! We have two articles that will answer your question in detail. I suggest you read this one first, then if you need more info, supplement your reading with this one.

This comment refers to an earlier version of this post and may be outdated.

Colin Plummer April 9, 2017 at 9:56 am

About 18 months ago we joined Flagstaff to provide credit card procesing
on line.
The system has workes just fine , no clitches or hang ups and processes all cards inclusing Amex Discovery etc.
The problem is that our business is seasonal with little trade in the summer
The winter is good and our March turn over in credit cards was 15,000 + US
Dollars in the summer it can be as low as 1,000 US Dollars
Our probem is that we are paying a very low commission rate with a free
Counter unit whcih includes a customer swipe but I feel that we should be
Having a better deal as our payments to Flagstaff are never less than
500 US Dollars a month. OK when we are taking 15,000 but not so good when we
are turning over 1,000 9in the summer !
I contacted thenm last week and they have adnmitted that there is
a mistake and that they are going to put it right I feel that they should have notices the error
Could you rcommend a solution to me? We currently work with Capitol one and
and Wells Fargo Capitol One give us the better deal at thois time
Do they process Credit cards?

Thankinking you in advance for any help you can give us

Many thanks

Colin J Plummer

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal May 4, 2017 at 8:36 am

Hi Colin,

Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend CDGcommerce and Helcim. I would encourage you to use the green “visit site” button within our reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

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Company	Summary	Next Steps
	Fundera is a business funding matchmaker who will match you up with other business funders you may be qualified for. Fundera is a good place to start your search for business funding, including SBA/PPP loans. Not only is Fundera convenient and helpful, but it also has transparent terms and fees.	Get Started See Our Review
	Lendio is a business financing platform that matches customers to funders, including SBA/PPP lenders. It has a relaxed credit score requirement, and there’s no fee for using the service.	Get Started See Our Review
	Credibly is an online lender that offers short-term financing in the form of business loans and merchant cash advances, including SBA/PPP loans. Credibly’s qualifications are much lower but its origination fee is high. If you’re in a pinch and don’t have access to other financing options, Credibly might be the lender that works for your business.	Get Started See Our Review
	BlueVine is an online lending service that's suited for small businesses. It offers SBA/PPP loans, term loans, lines of credit, and invoice factoring. BlueVine is one of the most accessible invoice factors available and a good choice for B2B businesses.	Get Started See Our Review
	Fundbox is a business lender that specializes in offering lines of credit to small businesses. Merchants access this line by connecting either their business checking account or accounting software to Fundbox’s platform and a credit decision is returned in 3 minutes or less. Fundbox requires a credit score of at least 500 and 3 months' time in business.	Visit Site See Our Review

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Freida May April 3, 2017 at 5:52 pm

Looking for a good processing company.

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal April 4, 2017 at 5:13 pm

Hi Freida,

Thank you for your inquiry, I am happy to help you with this. We have a great filtering tool that you can try here. I would encourage you to use the green “visit site” button within the reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

mary kramer April 1, 2017 at 2:34 am

We have 60 unit building with 4 washers/4 dryers. We use cards &
load them at a machine for $10, $25, $50 to do our washing.
We are charged $60 to $80 monthly by telephone company.
Seems high charge for 60 second phone transactions. How
much does each transaction cost?
Thank you
mary

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal April 3, 2017 at 3:24 pm

Hi Mary, Unfortunately this isn’t quite our area of expertise so I can’t speak confidently. If you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Eric Katzer March 30, 2017 at 6:03 am

Thanks for the info. Looking to start accepting credit cards for my business. Do businesses generally just factor in that cost into their pricing or add a fee at the time of sale? As a Costco member, I have received a webinar from Elavon. What is your take on them? Thanks much. -Eric

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 30, 2017 at 10:18 am

Hi Eric,

You have the ability to add a surcharge, but it will depend on which state you are in. This article will give you a full breakdown. Elavon is a good company, but I would recommend going through Helcim, which uses Elavon as their back end processor. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Cameron March 28, 2017 at 3:07 pm

Hello Amad,

I appreciate you taking the time to write this article, it has answered a lot of my questions and created even more. I work for a motorcycle manufacturer that is currently growing drastically. I am attempting to streamline our parts ordering process to decrease the time needed to process each order. Can you recommend a web-based system that we could switch to that would offer competitive rates when compared to our in-house credit card system?

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 29, 2017 at 12:05 pm

Hi Cameron,

Thank you for your inquiry, I am happy to help you with this. We have a great filtering tool that you can try here. It will help narrow down your options and point you in the right direction. I encourage you to use the green “visit site” button within the reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Tracy March 24, 2017 at 1:07 pm

looking at moving my credit card processing from a company that has been charging me interchange + approximately .30 markup + .17% discount fee + .10 per item fee. to a reputable bank charging interchange fee + .20% and .10 per item. My question is, I run approx. 12,000,000.00 in credit card sales a year. Is this a good rate for a very financial sound business with this level of volume ?

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 29, 2017 at 12:31 pm

Hi Tracy,

I am going to send you an email so please keep an eye out for it.

This comment refers to an earlier version of this post and may be outdated.

Chad April 4, 2018 at 10:18 am

Hi Tracy,
I see I am late to the party, but wanted to respond to this thread. Although the discount rate is lower, what you need to focus on now is processing the Purchasing, Corporate, and Business cards more effectively in order to achieve Level 2/3 interchange. This will have the most significant impact on savings. With $12mm in annual volume and if you are a B2B company I would bet there is $100,000 in annual savings by processing correctly. If you would be interested in a conversation I would love to chat.

Thank you,
Chad

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William Groce March 23, 2017 at 6:10 am

Hello,
My business does all keyed transactions. I have been with two different processors. Paypro Tek and am now with Heartland. Both use interchange pricing and over the fifteen years I have been taking credit cards my bottom line effective rate is around 3.2 to 3.5%. with mid 6 figure yearly volume including Visa, Mc and Amex. Now a company from New York says they will guarantee me a 2.7% bottom line effective rate. I stress to them that there are no swiped transactions. My question is are the pass-thru interchange amount the same for all processors. They say they pay less to Visa MC and Amex than Homeland. When I add up the pass-thru discount interchange rates without DPI and transaction fee the new company would be loosing on every transaction. Are Interchange discount fees the same for all processors? Thank you

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 15, 2017 at 2:21 pm

Excellent question William. Here’s an excerpt from our eBook that should answer your question: “The fact of the matter is that the merchant account provider (represented by the salesperson you speak to) has absolutely no control over interchange fees and other wholesale costs.”

This comment refers to an earlier version of this post and may be outdated.

Chad April 4, 2018 at 10:21 am

Hi William,
As a B2B and Card Not Present specialty service provider there is the potential to get a much lower overall effective cost. You just need to focus on processing the Business, Purchasing, and Corporate cards effectively in order to achieve Level 2/3 interchange. Would love to discuss if interested in learning more.

Thank you,
Chad

This comment refers to an earlier version of this post and may be outdated.

Chris Matters March 22, 2017 at 3:43 am

Hello!
I appreciate the information here, as someone who is just getting into Credit Card usage I found it very informative.

So I own mobile home parks and am expanding to RV parks. I take in monthly rents and utility fees. I am buying a new park which had about $300,000 in Credit Card charges last year. I am trying to find the best way to process this. While most would be in-person swipes, how can I process deposits/pre-pay customers without being double tapped on fees. Also looking to improve/reduce the previous reported fees, which ate up a considerable amount of the previous owners revenues.

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 23, 2017 at 6:32 am

Hi Chris,

Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Fattmerchant. I would encourage you to use the green “visit site” button within the review if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Jeff March 15, 2017 at 11:02 pm

Thanks for the useful info!

I have a coffee house that is about to start accepting credit payments. The processor my POS company put me in touch with is offering Interchange Plus .25% + .10, but I’m hurt by my necessarily smaller check average. A $15 check puts me around 3.38% overall effective rate, if my calculations are correct, which is a fair bit high. Throw in monthly fees for PCI compliance and statements and I’m wondering if credit is worth it at all. Whatever processor I choose, I’d want to integrate them with my POS software to use the swipe features of my terminals. I’ve been warned that “bridging software” by the POS company for another processor would be $1000 fee, but they also said some processors would be willing to pick up the fee. Any advice? Which processor do you recommend?

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 16, 2017 at 10:11 am

Hi Jeff,

Thank you for your inquiry. I am going to send you an email right now so please keep an eye out for it.

This comment refers to an earlier version of this post and may be outdated.

David March 14, 2017 at 4:21 pm

We do $20-$30K in monthly transactions using PayPal Pro. Should we be looking at another processor? I don’t have any issues with PayPal, just not sure if I’m leaving money on the table. I don’t really want to go through the hassle of transferring unless I can save some real dollars.

Thanks!

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 15, 2017 at 3:56 pm

Hi David,

Thank you for your inquiry, I am happy to help you with this. I would take your current rates to CDGcommerce and Payment Depot to see if you can get better rates. I would encourage you to use the green “visit site” buttons within our reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Michael May 2, 2019 at 6:09 am

If you are doing such high transactions per month, PayPal might not be the best option for your business. Doesn’t Paypal usually give discounts or lower rates based on monthly/yearly transactions?

This comment refers to an earlier version of this post and may be outdated.

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JB March 2, 2017 at 9:08 am

Thanks for the article. Quick question, are there some payment processors which will process a transaction in a way to take advantage of the lowest interchange rates? We process a significant monthly volume (over 10,000 transactions) and they are all repeat customers, but not a subscription service. Our interchange rates are hugh. I’d heard some processor may “redirect” the transaction to take advantage of lower rates.
Any thoughts would be appreciated

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 15, 2017 at 2:25 pm

JB, I’ve honestly never heard of that type of strategy. If you happen to find an answer, please let us know.

This comment refers to an earlier version of this post and may be outdated.

Patricia February 27, 2017 at 6:59 pm

Hello,

I find your article very informatice. Thank you for the great work.

Question: What would be the best solution for not-for-profit membership/trainings/lessons/seminar man-power shortage environment?

Please provide some suggestions.

Thank you very much, Patricia

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 3, 2017 at 5:44 am

Hi Patricia,

I would suggest taking a look at this detailed article on processing for non-profits. I would encourage you to use the green “visit site” link within our reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Joe February 21, 2017 at 8:16 am

Hi,

I recently renegotiated revised pricing with Wells Fargo Merchant Services on my account. The new pricing says that the pricing type is “Fixed Rate with Non-qualified Fees”. The discount rate is 1.88% for credit card, and 1.38% for debit. They also provide a Interchange Pricing Summary. They don’t mention mid-qualified. So, I am not clear what kind of a pricing model this is, and would like your help in determining if this is a fair plan.

Thank You

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 24, 2017 at 11:18 am

Hi Joe,

This sounds like tiered pricing, a model we strongly recommend against. Make sure you get the Interchange Plus pricing, it is much more transparent. I would also recommend taking a look at our review of Wells Fargo here. If you need help choosing an alternative, please let me know.

This comment refers to an earlier version of this post and may be outdated.

Matt Devine February 9, 2017 at 2:34 pm

I just purchased an Adult Daycare center. I currently have about 30 participants. I bill monthly and the average bill is $1,500. I take 7 credit card payments. Six Visa and 1 Master card. The total billing was $10,786.5 and I incurred fees of $355.39. I’m on the interchange-plus pricing model and went thru my credit Union Trumark Financial to get my credit card vendor who typically has low fees. The wholesale fees which you say are in stone are 2.3% and 2.95% for Visa clients and 2.5% for Mastercard plus .1.
My hotel client says I shouldn’t be paying anything on Visa and Master card clients. That I can set up to take payments from the Credit card Association. He says Amex and Discover are the only ones that charge a fee. Is there any merit to this?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 20, 2017 at 12:33 pm

Matt,

We’ve been studying the merchant account space for almost 8-years, and in all those years, we have never heard of a way to circumvent the wholesale interchange rates that are set by Visa and Mastercard. Additionally, neither Visa nor Mastercard allow you do go “direct.” If you want to accept Visa and Mastercard payments you have you have to go through an intermediary as evidenced by the following landing pages:

https://usa.visa.com/run-your-business/accept-visa-payments.html
https://www.mastercard.us/en-us/merchants/start-accepting.html

Your hotel client is grossly misinformed.

This comment refers to an earlier version of this post and may be outdated.

Nikita February 8, 2017 at 10:09 pm

Hi.. I’m about to open a carry out restaurant and not certain how much customers would be using credit card. Which credit card merchant do you recommend?

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal February 13, 2017 at 9:05 pm

Hi Nikita,

Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Square. I would encourage you to use the green “visit site” button within the review if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

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dflood February 7, 2017 at 1:04 pm

Hello I own a small marine detailing company. We process around $50,000 annually.
My bank has offered me these rates.
v/mc/dis/amex discount rate 0.17% per item fee .20

monthly minimum fee $20.00
network access fee $5.00
merchant compliance fee $9.95
PCI_DSS non compliance fee of $15.95

They also want me to pay an application fee.
Thoughts???

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 21, 2017 at 12:19 pm

Hey D,

All in all, I’d say your flat fees look fair, but your transaction fees deserve a second look. However, we typically recommend a Payment Service Provider, like Square for businesses generating less than $5k/mo. You can learn a bit about their differences here I’m willing to bet that your overall costs will probably be lower with Square.

This comment refers to an earlier version of this post and may be outdated.

Adi February 6, 2017 at 10:53 am

Hello,

I am in the process of selecting a vendor for my business. Basically, I expect my business to be making many transactions but each transaction will be $50 or less. So for example, I can expect over 1000 transactions from customers and each transaction to be on average $40.

Due to the numerous transactions and the low value of each transaction, I wanted to know which model would fit my business best. Thank you for your help.

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal February 6, 2017 at 12:54 pm

Hi Adi,

This is a great questions. Since you are doing a high number of transactions, going with a traditional merchant account would be the most reliable. It is riskier to do 1000 transactions at $50 because that is 1000 chances to have a chargeback. If you would like some help picking out the right processor, please contact me and I will be happy to assist you.

This comment refers to an earlier version of this post and may be outdated.

Isabelle Bradbury February 1, 2017 at 6:17 pm

Hi, I’m looking at setting up an e-commerce site for processing building construction applications on behalf of municipalities. Currently most cities do not accept credit card payments due to the processing costs and yet without credit cards (or debit cards) an online service could not exist. I am intrigued by the European Union’s edict limiting credit card processing fees to 0.3%. Is it possible to direct transactions to a European processing centre without currency exchange? Most of the money flowing in from a country would be returning back (i.e. from the customer to the merchant via the European Union). No tax evasion, simply the search for safe, secure and low-cost processing costs.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 22, 2017 at 11:18 am

Isabelle, in all honesty I’m not even sure if that’s possible. This type of situation falls outside of our expertise and I would hate to give you advice that I’m not sure of. Best of luck to you.

This comment refers to an earlier version of this post and may be outdated.

ekf January 29, 2017 at 3:10 pm

Hello, I’m about to open a restaurant in LA. Toast quoted me 2.49% + .15c for the first month. After 30 days of processing I was told they’d find our effective rate (middle rate, essentially) and install that as our flat rate. I’m planning to negotiate this starting rate and (what seems to me) crazy-high per-transaction charge. I’d love advice on what to expect and what I should ask for!

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal February 1, 2017 at 11:17 am

Hi Ekf,

The rate is pretty standard, but it isn’t the best situation to have your rate change after 30 days since you are already committed to the service. What you should expect/ask for is based on your projected card payment volume. I would recommend taking a look at the introductory rates for Helcim. They offer an interchange-plus quote even for new businesses, and that rate would be a good one for Toast to match. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Gail January 24, 2017 at 4:03 pm

Hello,
I run a small medical supply company. My website by GoDaddy was set up to take payments through First Data. I do about $30,000 in cc processing and paid an average of 11% GoDaddy/First Data in monthly fees and charges in 2016.
All of my clients are Universities that use corporate credit cards. They don’t pay through my website because they get preferred pricing, I key payments in through my First Data dashboard. I need a cheaper alternative. I’ve even eliminated my shopping cart from my site. Any suggests of who I should use? Thanks!

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal January 26, 2017 at 12:21 pm

Hi Gail,

Thank you for your inquiry, I am happy to help you with this. I would recommend Payment Depot and Helcim. I would encourage you to use the green “visit site” button if you would like to support our work. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

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Company	Summary	Next Steps
	Fundera is a business funding matchmaker who will match you up with other business funders you may be qualified for. Fundera is a good place to start your search for business funding, including SBA/PPP loans. Not only is Fundera convenient and helpful, but it also has transparent terms and fees.	Get Started See Our Review
	Lendio is a business financing platform that matches customers to funders, including SBA/PPP lenders. It has a relaxed credit score requirement, and there’s no fee for using the service.	Get Started See Our Review
	Credibly is an online lender that offers short-term financing in the form of business loans and merchant cash advances, including SBA/PPP loans. Credibly’s qualifications are much lower but its origination fee is high. If you’re in a pinch and don’t have access to other financing options, Credibly might be the lender that works for your business.	Get Started See Our Review
	BlueVine is an online lending service that's suited for small businesses. It offers SBA/PPP loans, term loans, lines of credit, and invoice factoring. BlueVine is one of the most accessible invoice factors available and a good choice for B2B businesses.	Get Started See Our Review
	Fundbox is a business lender that specializes in offering lines of credit to small businesses. Merchants access this line by connecting either their business checking account or accounting software to Fundbox’s platform and a credit decision is returned in 3 minutes or less. Fundbox requires a credit score of at least 500 and 3 months' time in business.	Visit Site See Our Review

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Brooke M Campbell January 24, 2017 at 1:52 pm

My family is staring up a small kitchen that serves lunch and dinner 5 days a week. We have one of those swippers that you use right there at the table with a phone or a tablet. It accepts all major credit cards and has a rate of 2.75% each swipe, that is directly linked with our business bank acocunt. There are no hidden fees or additional costs for statements. It seems to be an average rate for the volume of business we are doing at this time. Only downfall is we do not have a way to print a customer cc receipt. Moving forward, we are wondering if this will be the most cost effective. We are old school and hand write our tickets, but would like to get actual POS system as we grow. I would appreciate some feedback on what we should do. Thanks so much!

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal January 27, 2017 at 8:19 am

Hi Brooke,

Thank you for your inquiry, I am happy to help you with this. I am going to send you an email, so please keep an eye out for it.

This comment refers to an earlier version of this post and may be outdated.

Ross Nunan January 24, 2017 at 10:58 am

I’m looking into building a e-commerce website which I intend
to use payapl for but also wanted to have telephone sales.
I heard that a credit card machine can require large cash deposits for new ventures.
What should I budget for my start up company to have the ability to do credit card transactions?
Thanks Ross Nunan

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal January 27, 2017 at 9:00 am

Hi Ross,

Thank you for your inquiry, I am happy to help you with this. I am going to send you an email so please keep an eye out for it.

This comment refers to an earlier version of this post and may be outdated.

Anyssa Velasquez January 16, 2017 at 10:23 am

Hello, thank you so much for the information! We have an LLC in manufacturing. Our transaction amounts run in the thousands. We currently have Square but we are looking to purchase a card reader. Can you please point me in the right direction?

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal February 13, 2017 at 11:47 pm

Hi Anyssa,

Thank you for your inquiry, I am happy to help you with this. We have a great filtering tool that you can try here. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Ken January 2, 2017 at 2:59 pm

Hello my name is Ken and i have a similar question that many others are asking and you are sending emails for answers
I have always struggled with this and now am taking a new restaurant property that does between $90k to $100k a month in CC transaction with a high volume of tickets

Do you have some companies or fee program you suggest?

Thank you

Ken

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal January 10, 2017 at 9:11 am

Hi Ken,

I went ahead and sent you an email, so please keep an eye out for it.

This comment refers to an earlier version of this post and may be outdated.

Tho Phung January 2, 2017 at 2:24 pm

Hi,
We are looking for new credit card service provider to replace the current one with very high over rate. Our credit card volume is about 400K to 500K paid by few customers with non card presented, and very high ticket that is as high as 120K. Would anyone recommend ones with overrate about 2.5%?
Thank you in advance for your help.

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal March 27, 2017 at 2:59 pm

Hi Tho,

Thank you for your inquiry, I am happy to help you with this.Based on the information provided, your best options are going to be Durango Merchant Services, Payline Data, and Instabill. I would encourage you to use the green “visit site” button within the reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.

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Neil DeBoer December 29, 2016 at 7:14 am

Hidden Fees or Scam?
We deal with several processors, Sage (for online processing), Leader (and lately Anywhere Commerce which is affiliated with Leader for mobile processing solutions similar to Square). I got into a conversation with another local Rotary Club about who they are using and their costs. They are using Square for their processing now. Their Treasurer tells me that Square charges them roughly 2.5% for processing and there are NO credit card transaction fees or other fees charged or taken out of their deposits for anything else. Is that possible? If not then where would these charges show up? Her opinion is that most of the processors are running a scam by passing through these other charges. From what I have seen and studied in the past I seriously doubt that. Our processing fees are around 2.5% but with the other fees added in our total costs to process credit card transactions run between 5% and a little over 6%. Appreciate some feedback on this issue. Thanks, Neil

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 21, 2017 at 12:07 pm

Hi Neil, you can find a breakdown of Square’s rates listed in our review of them here.

This comment refers to an earlier version of this post and may be outdated.

Ashley December 28, 2016 at 9:59 am

Hi – Our business has always struggled with what % we should be charging customers who use a credit card to cover the convenience fee. The issue is that if we add an additional % to our product cost for the CC fee, the overall fee increases because we are running the card for a higher $ amount. I know there’s got to be a formula I learned at some point in school to do the math but it seems to be escaping me.

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal December 30, 2016 at 2:30 am

Hi Ashley,

That’s a great question. Passing on the fees to a customer is going to depend on the state laws of where your business is located. A lot of states have laws prohibiting it, so you will have to make sure that isn’t the case for your state. For states that allow the practice, the business can generally charge a fee equal to the actual cost of processing the transaction. But, you will need to make this clear before the customer pays. Here are a couple of articles that will help: Article 1 and Article 2. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Neil DeBoer December 30, 2016 at 12:13 pm

Passing on fees to customers: Not sure that passing on the processing fees to customers is the best idea. And, as Chloe said some states do not allow that. Some companies get around that by offering cash discounts and pricing all of their products high enough to cover the cost of the credit cards. However, you should also look at the cost savings of credit card sales before you consider any of these options. When you take a credit card you don’t have to count cash and checks at the end of the day. You don’t have to transport cash or wait in line at the bank. And your bank reconciliations are typically a lot easier and faster with credit card transactions. Cash and check transactions are clumsy and time consuming compared to credit card transactions. Part of the expense you incur from your credit card transactions comes back to you in cost and time savings.

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Don Huck December 21, 2016 at 4:08 pm

Great website. I do have a question. My merchant processor has just notified me on my current statement that they are going to charge their merchants a Regulatory Fee Up to $49.95 starting in December 2016. According to my statement its is due to the “Housing Assistance Tax Act that included the enactment of section 6050W of the IRS code, which requires the reporting of certain monetary processing information for each calendar year. This requirement includes filing and annual information return with the IRS and providing you (the merchant) with a corresponding form 1099-K that will report your gross sales. In order to manage the processes needed to meet these reporting requirements , a regulatory fee of up to $49.95 will be assessed on your Dec 2016 statement”

Are you aware of other merchant processors charging this fee? Is this fee legitimate and can merchant processors charge a fee to merchants to process information to the IRS? Should I fight this fee?

Thanks for your time.

Don
Talking Books Plus.

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 22, 2017 at 11:29 am

Don, we have a short article about the IRS reporting fee here. Go ahead and read it, then follow the advice given.

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Diane Lange December 19, 2016 at 9:22 am

Hi
I own a tattoo studio and have been processing credit cards for 25 years.. i switched to bank of America for my credit card processing about 7 years ago and upgraded my machine approx. 3 years ago. now i need a chip reader and they want to charge me for a new machine… i process on average 4000-11,000 a month based on time of the year… what are the best companies for rates and equipment that you recommend? thanks for you time.. Diane

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal December 19, 2016 at 1:32 pm

Hi Diane,

Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Helcim, CDGcommerce, and Dharma Merchant Services. I hope this helps and if you have further questions please let me know.

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Shree December 17, 2016 at 9:18 am

Hi,

Its a great informational page for new biz owners like me. I am getting into QSR franchise biz in US. I am required to use “Revel” PoS but I can chose merchant I want. I was recommended to use Wells Fargo as the Corporate banks with them. However reviews of Wells Fargo Merchant services are not satisfactory and hence landed on this page.

Would you recommend me to some best merchant services with no contract/commitments yet low cost so to better the margins ? Price range for the products is from $3 to $15

Thank You
Shree

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Chloe Bahal December 19, 2016 at 1:53 pm

Hi Shree,

I am going to send you an email right now, so please keep an eye out for it!

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Cinda Bailey June 29, 2018 at 9:59 am

Chloe,
Can you send me a list of some of the best merchant services with no contract/cp,,ot,emts and low costs? We do around $700,000. per year in our small business. We get so many calls from processors and they all have the same story about saving us money. It never works out that way! Right now, we have Integrity. Thanks!!

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Jessica Dinsmore June 29, 2018 at 12:26 pm

Hi Cindy,

You can compare our favorites or try our filtering tool, to determine which provider best suits your business needs. I hope that is helpful!

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Pricing model	Interchange-plus*	Interchange-plus*	Interchange-plus*	Interchange-plus*
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*All of our preferred processors use fully transparent Interchange-plus pricing.

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john December 16, 2016 at 7:55 pm

Very good information! Thank you for lending your expertise!

i was thinking about ways to save money for the company i work for and figured merchant transaction cost may be one. This is not my department but I wanted to learn a little bit about the subject before creating any kind of proposal. My company’s revenue is over $1 billion dollars with most of it coming from US based sales. Are you able to lead me in the correct direction for researching the most profitable option? And what information should I obtain from my company that will aide in analyzing the current state?

What kind of approach can i take to determine

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Chloe Bahal December 20, 2016 at 4:58 pm

Hi John,

I am going to send you an email with some information, so please keep an eye out for it.

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Andy December 15, 2016 at 9:46 am

Hello there,

I’m looking to start a brewery/taproom. Average ticket will around about $15 but many tickets a day (quantity over quality scenario). With that being said, looking for a low per-transaction cost but will sacrifice for a higher %.

If this venture goes well then we might be opening others like it around the state so we’d like to use the same gateway and cc processor throughout (might be able to leverage that for better rates).

Our POS system limits us to four gateways now but I wasn’t sure if that was something that is typical.

I had some troubles with a cc processor at a previous brewery I started where cards that were entered-in manually weren’t able to process or acknowledge the tips that were made (bartenders were NOT happy about that) so I’m trying to avoid a situation like that.

Suggestions?

Thank you kindly!

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal December 15, 2016 at 12:01 pm

Hi Andy,

Thank you for reaching out. I am going to send you an email right now, so please keep an eye out for it.

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carrie December 8, 2016 at 8:59 am

Including monthly fees our average rate that our business pays is 2.6% – is this “good” or “bad”?

Thank you for your article,

Carrie

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal December 17, 2016 at 10:10 pm

Hi Carrie,

2.6% is within the average range for processing fees. You might be able to get it a little lower, but it probably won’t be by much. I would recommend trying our filtering tool and contacting the different processors for a quote. I hope this helps and if you have further questions please let me know.

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Jose Arteaga December 6, 2016 at 5:15 pm

I am curious, do merchant account providers offering interchange plus fee structure actually send merchants a statement with the interchange fees per transaction type and the markup? I am not too familiar with it and do find most retailers taking advantage of tiered pricing where they negotiate the lowest rate on the most frequent transaction type (qualified, mid-qualified and non-qualified).

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Jessica Dinsmore June 22, 2017 at 11:39 am

Jose, Most processors will include base interchange fees per type, and will list markup. Might be a little hard to read, but the answer is yes.

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Tristan Daniel December 2, 2016 at 6:03 pm

Which system would be best for several small charges ranging from $12-20?

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Chloe Bahal December 2, 2016 at 6:34 pm

Hi Tristan,

If you are looking for a mobile processor, I would recommend Square. If you are looking for a traditional merchant account, I would check out CDGcommerce. I hope this helps but if you have further questions please let me know.

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arran martin November 22, 2016 at 10:19 am

Hi , this seems like a real mind field for a new start-up, we are opening an aqua park business for 2017, This is a seasonal business which charges customers £15 phpp. We have a max potential to turn over £9600 per day which we hope will be mainly via an online booking system, but we also need to be able to accept card payments from walk in customers as well.
Any advise would be great thanks
Arran

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Chloe Bahal November 29, 2016 at 5:04 pm

Hi Arran,

I just sent you an email so please keep an eye out for it!

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Chris B November 17, 2016 at 5:21 am

I have a small training company, so people call in or mail me the registration forms and I process their credit card using an internet based merchant account. Do you have any recommendations for online merchant account processing that has the lowest rates?

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal November 17, 2016 at 1:28 pm

Hi Chris,

Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend CDGcommerce, Payment Depot, and Helcim. I hope this helps and if you have further questions please let me know.

This comment refers to an earlier version of this post and may be outdated.

Britt Douglas November 16, 2016 at 10:56 am

We have been using Fifth third which I believe has been bought by Vantiv for our Veterinary Clinic for last 3+ yrs. We have a standard Vx570 Verifone that needs to be upgraded to a chip compatible. The machine has been on the fritz for last 2 weeks and now I am doing some analysis before renewng a three yr contract. They wanted $495 for a verifone vx520 OR a 39.95/month lease that included Verifone vx805? and Omnishield Breach assist for 48 months. We process approx 14 to 15,000 per month in Visa and M/c sales and $800 in American Express and $2-3000 in Discover each month. Our “discount rate” is 2.37% and going up again. So our average costs for Merchant fees is 908.71 per month and avg cost for billing is 300 per month. I have since looked into Dharma and my local bank Marion County savings which they said fees would be comparable to fifth thirds rates. But shouldnt they be much lower as I do use them for our bank? Thoughts?

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Chloe Bahal November 17, 2016 at 2:12 pm

Hi Britt,

I am going to send you an email right now, so please keep an eye out for it!

This comment refers to an earlier version of this post and may be outdated.

Adel November 15, 2016 at 1:55 am

Amad.

I’m opening a Wireless cell phone shop. We process payments and sell phones and accessories. We are expecting to do about 1,500 payments of average $48.00 per payments plus 300 phones monthly at average $120 per transaction. Of course the payments gets collected electronically every 3 days. I found flagship processing company that’s charging us $.19 per debit or credit transaction plus 0.58%. And $7.99 a month . Do you recommend them ? Am I paying too much ? Thank you

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal December 5, 2016 at 7:15 pm

Hi Adel,

This is pretty comparable to the industry standard, but I would try to negotiate getting interchange-plus pricing. Their pricing does vary considerably so you will want to make sure to get your rates in writing. Don’t be surprised if you get charged more than 0.58% — that rate only applies to certain transactions. I would recommend taking a look at our review of them here for more information. I hope this helps and if you have further questions please let me know.

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Luisa Land November 5, 2016 at 5:35 am

We are in the process to open a donuts / coffe shop. Ticket items from $ 1.35 to $13.00
Can you suggest a Merchant that fits our needs
Thank you

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal November 11, 2016 at 8:22 pm

Hi Luisa,

Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Square.

This comment refers to an earlier version of this post and may be outdated.

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Cathy Brown November 4, 2016 at 6:59 am

We are a small vacation rental office so most the money we process for the rental we do not keep – we only retain a small percentage as commission and the rest we mail to the individual owners of the various homes. Therefore our fees are going to be based on the total amount we receive into the office and obviously not on the small amount we actually get to keep.
We will never see a credit card since all payments will be taken on-line and processed via a link we send to the tenant. Is there a company that would be best suited to us whose fees are going to be lowest possible?

Thanks for your help – interpreting the fees involved seem pretty overwhelming. Cathy

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal November 7, 2016 at 6:16 am

Hi Cathy,

Thank you for your inquiry, I am happy to help you with this. I would recommend taking a look at Durango Merchant Services and Payline Data. I hope this helps and if you have further questions, please contact us.

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Jason November 7, 2016 at 7:14 am

Kathy you have to negotiate yourself. I have been in the industry for years and if you showed me a statement I would have to beat it.

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Chris November 2, 2016 at 2:52 pm

Amad –

Perfect analysis for the uninitiated. Thank you.

Do you happen to know anything about a company called Authorized International positioning itself as a wholesale processing company?

Thanks –
Chris

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal November 3, 2016 at 6:34 am

Hi Chris,

Unfortunately I don’t have much information on Authorized International so I can’t speak confidently on them. If you are looking for a merchant account, you can try our filtering tool here. I hope this helps and if you have further questions please let us know.

This comment refers to an earlier version of this post and may be outdated.

Emily October 22, 2016 at 7:46 am

Hi,
Thank you for the article! We have a seasonal business, and a retail website, but most of what we do are B2B (card not present) transactions. PayPal & Square seem to be expensive when processing large payments. We would like an option for processing larger transaction amounts, but since we’re seasonal, we’re not consistently processing large transaction. Any suggestions?

This comment refers to an earlier version of this post and may be outdated.

Jessica Dinsmore June 22, 2017 at 11:55 am

Emily, apologies for the delay in response, if you’re processing a total of less than $50k annually, then Paypal or Square might still be the cheaper options regardless of your high per transaction amounts. Traditional merchant accounts have fixed monthly fees that might eat into any savings you’ll experience by going with a traditional processor. In order for us to know what the better choice is, we’ll have to know how much you process annually.

This comment refers to an earlier version of this post and may be outdated.

calvin le October 10, 2016 at 8:39 pm

Thank you for the great article Amad,

I processed anywhere from $170,000 to $175,000 monthly. I just got quoted .05% as my rate and .05 per transaction fee. My program that I got quoted was the ” cost plus pricing ” with an disclosure ” all standard payment network fees and charges will be added to the fees below” which is the .05% for the rate and the .05 per transaction. This is almost too good to be true. What are your thoughts about this and can the merchant company raise the assessment and interchange rate on us? I also just signed up with CAKE POS. I didn’t read the fine prints that they are exclusive with World Pay. I have no choice but to go with World Pay. Is this a standard practice to lock us in with an exclusive merchant processor? I signed the contract but those ” exclusive ” was very fine printed. Please advise.

Thank you,

Calvin Le

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Chloe Bahal October 12, 2016 at 11:06 pm

Hi Calvin,

I am going to contact you via email.

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William Engstrom September 11, 2016 at 3:12 am

Have a small massage business. I want to use a simple phone card swipe. I do maybe $500 to $1000 in credit card sales a month. What would be the best and or cheapest way to go? I use to use Groupon breadcrumb phone swipe fyi.
Thank you
Bill Engstrom

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Chloe Bahal September 24, 2016 at 5:18 am

Hi Bill,

I would recommend taking a look at Square.

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George Tsatsos July 7, 2016 at 8:32 am

Great stuff breaking it down. In the real world-it turns out to be the average percent charged. When you get your statement, review all fees using the well written guide above.
However, I’ve found that after all the negotiations, since there are so many “perk cards” with different fee adds that when I switch merchants-no matter what they say, make sure you own your machines & there are no exit fees.
A very good percentage total-with all fees-is @ 2.5-3%- That’s if you’re more than 10K a month in sales.
Expect .5% more with low sales. Use these percentages as guides & go negotiate!

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Dee June 27, 2016 at 8:51 am

I’m just starting out and providing a service over Skype and phone for which I’ll need to get credit card info. Can you tell me please who you think has the best product for this, and do I have to have a website, which currently I do not. I’m in Canada. Thanks.

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal July 2, 2016 at 6:31 pm

Hi Dee,

That’s a great question, no, you won’t need to have a website. I would recommend taking a look at Helcim.

This comment refers to an earlier version of this post and may be outdated.

Tricia June 26, 2016 at 6:02 am

Love the article, but one question for my specific situation. I will not have transactions every month, maybe only one or two a year. But when I do have a transaction, it will be for $10,000+

Is paypal a good plan for me, or should I pay a monthly fee even though I am not using the service?

This comment refers to an earlier version of this post and may be outdated.

Brian Mead June 15, 2016 at 8:05 am

Great Read.
Now I understand this mess and my guns are loaded for my 5 meetings!
I know I will save my company money!

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Christine May 31, 2016 at 10:23 am

Hi,

I am merchant account holder. I just sign up a contact with one of credit card processor, and using for two days. They charger more than what they said. After calling they, they claim the only earn 1.76 from our account, rest of $33 is back to customer because those customer using cash back reward credit card. Thus, they will charge me the fee cost to process and whatever the fee that holdering back for customer for cash back reward. Is that true?

Thanks

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Lori April 26, 2016 at 4:03 pm

This is a great article! We are a small business with only about $9K (50 transactions) per month. We were using the 3 tiered model for years and years, since we have been in business a long time. I just discovered Payline Data and Payment Depot and calculated the difference in fees. It is unbelievable, my fees with the tiered company have been about $400/mo. With the new plan it will be about $80 – $90/mo. It’s almost too good to be true.

Thanks for your info. Spread the word! People like me who have been in business a long time may not know about these new plans.

This comment refers to an earlier version of this post and may be outdated.

Patti Bruno June 23, 2016 at 3:30 pm

Thank you for the information! We too are a small business and have been paying outrageous fees!

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Nick April 11, 2016 at 12:50 pm

Nice article. Question: My business customers are considered “high-risk”. In the application process, does this mean the acquiring bank makes the decision on issuing the merchant account?

Any suggestions for high risk? These are consumer lenders.

This comment refers to an earlier version of this post and may be outdated.

Austin March 30, 2016 at 4:27 pm

Hey Amad,
Really helpful article… I’m new to the payments space so am just trying to understand the basics.
I have to ask a really stupid question… I just can’t understand what the card associations (Visa, MasterCard) actually do… what real value do they provide?

In the regular transaction chain:
consumer –> merchant –> merchant acquirer –> payment processor –> card association –> issuing bank

What do the card associations actually do? The ‘interchange’ is just the process of exchanging information between processor and issuing bank, right? So can’t you cut out the card associations?

Aren’t they only licensing their names to put on the credit cards?

Maybe this is a totally dumb question but they don’t sign up merchants, handle processing, or issue credit… so can’t they be disintermediated?

Would appreciate your expertise and insight!

This comment refers to an earlier version of this post and may be outdated.

Chloe Bahal August 30, 2016 at 5:47 pm

Hi Austin,

Those are all really great questions. You might find this article helpful. If you still have questions please let me know.

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Pricing model	Interchange-plus*	Interchange-plus*	Interchange-plus*	Interchange-plus*
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Lisa March 29, 2016 at 11:57 pm

Hello Tom.
Super great article. Thank you.

As a very green novice, I am quite overwhelmed and must admit that I clicked on 5-6 of your valuable links but haven’t sifted through them yet. I was hoping to see a range for total fees in the form of a percentage so I could quickly evaluate my situation. Obviously, knowing that would tell me if I need to invest the time into learning the ropes.

I manage 2 vacation rentals using the popular booking sites. One site just increased their CC processing fees from 2.5% to 2.9%. They process about $80,000-$90,000 for me per year so the increase is $450/year on the high side. Seemingly not much but over time, it’ll add up.

I’m trying to figure out if processing credit cards directly through my vacation rental company would make sense.

So you have any quick advice?
Thank you.
Lisa

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Nima March 19, 2016 at 3:59 am

I live outside of the United States and am looking for a merchant service provider that will securely store my clients’ credit card info on their servers. In the event that I need to charge a card at a later date, I would like to access those details.
I don’t need their services to charge a card. I only want to have their services to store, access, and delete credit card details.

Can you suggest any service providers.

This comment refers to an earlier version of this post and may be outdated.

Rita Bell March 17, 2016 at 3:28 pm

Do all credit card processes collect their fees by crediting the amount collected or do they send a monthly invoice and then the merchant pays them via a separate transaction? Or does it vary by credit card processing company?

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Teresa February 26, 2016 at 9:12 am

Is it legal to assess a customer a % charge to offset the credit card fees incurred by the merchant? I’ve seen some of my vendors starting to charge a % and when asked they said it is to offset the credit card fees. How are they able to do this?

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone February 26, 2016 at 12:37 pm

Hi Teresa,

It is legal. You can surcharge customers who use credit up to the amount you are charged to process the transaction, but not more. So if it costs you 3% to run the transaction, you can surcharge up to 3% and still abide by the card network rules. State laws may differ though.

This comment refers to an earlier version of this post and may be outdated.

Gabe March 23, 2016 at 2:43 pm

Actually, it depends on the state. “Surcharges are (also) illegal in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas”

All four credit card company issuers also have policies that disallow charging credit customers a surcharge. That means, if a shop is doing it, they’re at risk of losing their ability to accept credit cards altogether. Merchants have however found a loophole that many are exploiting, offering a “discount” to cash payers is fine.

Sources:

http://www.creditcards.com/credit-card-news/credit-card-convenience-fees-cost-surcharges-1280.php#ixzz43lRbEQpn

http://www.creditcards.com/credit-card-news/business-surcharge-card-customers-1585.php

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Arty April 2, 2016 at 6:02 pm

In most states, no. Each state has it’s own laws. In FL, it’s illegal to charge a fee to take a CC.

It is, however, legal to offer cash discounts in almost every state. So you have to structure your pricing to suit.

This comment refers to an earlier version of this post and may be outdated.

harshad dantale February 4, 2016 at 9:34 am

Hi !
I deal in renting bicycles to customers. I need a cash deposit from them, and when the return the bicycle, i return them the cash deposit and charge them a rent. Is there a way where the credit card company comes in and holds his deposit for me, such that he has not paid me, but I am assured, in case he defaults.

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Stu January 8, 2016 at 8:42 am

My merchant account provider, Flagship, just charged me $49.95 for filling out the IRS 1099K. There was no mention of this fee when I signed up for the account or in any of their massive paperwork. Do I have any recourse in getting this fee refunded.
Thanks, Stu

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Springfield market LLC January 1, 2016 at 11:42 am

Looking for a new company that handles my credit card machines

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Dhruv Sehgal November 9, 2015 at 2:20 am

Hi Amad,

Great review – I learnt a lot. I am particularly interested in knowing more about the Subscription based Pricing Model. Can you please provide more examples? Which companies are currently doing this and in what industry? Have they added on more services to it like Loyalty Programs with Mobile Payments?

Would really appreciate your help.

Thanks.

Regards,
Dhruv Sehgal

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Tom DeSimone November 14, 2015 at 4:48 pm

Hi Dhruv,

Our two favorites for subscription pricing are Payment Depot and Fattmerchant. Both have mobile processing options, and you can add on third-party loyalty programs, or use a POS with a built-in loyalty program.

This comment refers to an earlier version of this post and may be outdated.

cindi October 1, 2015 at 4:25 pm

We are small business looking to change our credit processing from Trans Tech Merchant. They charge a huge amount and have not read 1 positive review about them. We process with a swipe terminal. Can anyone help with recommending a great company with good rates. Looking at using the square or Flagship Merchant Services based on reviews. Need to find someone asap as our contract is almost up.
Thanks for your help.

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Amad Ebrahimi October 1, 2015 at 7:24 pm

Cindi,

We have a great tool for this. Check it out here.

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Shariq August 31, 2015 at 8:16 pm

I have been struggling with finding the right or should I say best merchant that can allow me to make money 😉 I find that most of the big companies charge about the same, which sucks as they take most chunk of the money. Anyways Thanks for the details.

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daniel August 31, 2015 at 6:10 pm

Thank you for the information.
I just had our structure priced out, and I was told that cost+interchange was a total of 31 basis points. My agreement was supposed to be 10 basis points, and even on the face of it they are charging me 11-13 (visa/MC/Discover). I was told that the difference is what you describe as the “Wholesale” rate, meaning the interchange rate. So am I being cheated?

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Tom DeSimone September 1, 2015 at 5:25 pm

Hi Daniel,

The wholesale interchange rates vary widely, but average at maybe 1.70% + $0.10 or so for credit cards for most businesses (it really depends on your business and the types of cards used, however). If your markup is supposed to be 10 basis points (0.10%), then there should not be a separate charge of 0.31%. The markup (the “plus” part of interchange plus) should be a consistent figure, and should match the rate you agreed on at all times.

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Neil August 27, 2015 at 11:12 am

Thank you for the clear explanations of merchant accounts. Got caught up with a very shady merchant account with an expensive 4 year equipment lease. Unfortunately lots of me business owners fall victim to this scam in the busyness of business and do not research enough before making a costly mistake. I recently had a BofA rep tell me their Amex rates are the same as visa and mc – is that possible?

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Tom DeSimone August 27, 2015 at 4:21 pm

Hi Neil,

American Express rates are always going to be higher than standard Visa and MasterCard. So my concern is that you’re being overcharged for Visa/MC if the rate for those cards is the same as Amex. The only way to make meaningful comparisons in terms of rate quotes is to get an interchange-plus quote. That way the markup and wholesale are separate. Check out my quick guide to credit card processing negotiations for more information on this.

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Richard Siddall August 25, 2015 at 6:18 am

Great article, well done.

How about application fees? There seems to be a growing list of business types classified as high risk. I understand that even travel companies are now on this list. The application fees for these seems to becoming quite extreme. I have seen application fees paid to open accounts with the mainline schemes at USD5,000 and I have just had one come across my desk at USD50,000 – with no guarantee that the application will be successful. What is happening with high risk applications?

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Tom DeSimone August 25, 2015 at 2:49 pm

Hi Richard,

For standard merchant account, I’d usually insist on no application fees whatsoever. For high-risk accounts, it get trickier since some fee is often warranted to offset the time and cost needed to complete the application/setup process. But just because a fee is warranted doesn’t mean that any fee is fair. The tricky part is that “high-risk” is a catchall term, but really the merchants exist on a risk spectrum. Some are moderately high-risk, while others are extremely high-risk. Some are simple and straightforward to work with (or at least run applications for), while others will require a sizable investment of resources to setup. Because of this, setup and application fees are prone to vary widely. Since there is some subjectivity here, it’s difficult to pin down what a fair fee would be across the board.

But I’m having trouble imagining a scenario where a $50K fee (or even a $5K fee) would be appropriate. Some merchant services providers will take advantage of the desperation of high-risk merchants, and to me that’s what this sounds like.

My advice to merchants faced with large application fees would be this. First make sure you talk to at least a handful of different providers. If one is charging $100 to run the application and another is charging $5K, there’s something wrong there. Don’t let desperation get the best of you. Take your time and keep the pressure off yourself and put it on the sales rep. Always ask questions. When faced with a fee that doesn’t seem to make sense to you, ask for a breakdown of where that money goes. And then ask that same question of a different provider. Always remember that this is your money, and you are ultimately in control. Also, consider ways to lower your risk profile. How you’d go about this will vary depending on your business.

Hope this helps.

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brian keith conner May 22, 2016 at 8:35 pm

travel companies have been considered high risk for 20+ years….

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Lawrence August 22, 2015 at 9:26 pm

THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU!!!!!!!!!!!!

Knowledge is power my friend, this article is a refreshing change from the obviously sponsored “Best Credit Card Processors” I’ve seen elsewhere. I’ll definitely be checks your recommendations out!

One question: I’ve been told that credit card “Rewards” costs are often passed down to the merchant (airline miles, Disneyworld trips, cash back, etc.). Is this true? and if so is it avoidable?

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone August 23, 2015 at 4:11 pm

Hi Lawrence,

We’re glad to help!

The answer is yes, the cost of rewards are – in part – passed on to the merchant in the form of higher interchange rates. For example, a retail transaction with a standard Visa card will cost 1.51% + $0.10 in interchange. A “traditional” rewards card or a “signature” rewards card would cost 1.65% + $0.10. A “signature preferred” card (premium rewards card) would cost 2.10% + $0.10. So in this example, there is a difference of about 0.5% between the basic tier and high-tier cards. Obviously this doesn’t cover all of the rewards paid out, but it does offset the cost for the credit card companies.

The best way to save is to encourage debit card usage. Most Visa debit transactions only cost 0.80% + $0.15 or 0.05% + $0.21.

Check out this infographic for more information on credit card fees. Good luck!

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elen September 8, 2015 at 10:27 pm

So heres the thing . I was told that the rewards for the costumers promised by the credit card company , in actuality it does not come from the credit card company. It comes from the business owners bank account whom they purchase their goods from. Is this correct info ? If so , how did credit card companies manage to do this with out asking business owners. is called stilling . what can be done to stop it.

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Tom DeSimone September 12, 2015 at 1:34 am

Hi Elen,

I discuss this in the answer above. Part of the rewards do come from the increased interchange rates on rewards cards, but the increase from non-rewards to rewards cards is not high enough that the card companies could pay out all rewards with just this fee. A lot of the money to pay out rewards come from the interest the bank earns from the cardholder. But I agree that it’s unfair to surcharge the business owner to pay the rewards points. Unfortunately there is little we can do about it. You will have to talk to your senators and congressional representatives who might be able to introduce legislation to stop this practice. If it was up to me, there would be no rewards! I think the entire credit card rewards system is unethical.

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Pat August 12, 2015 at 8:49 pm

I’m considering changing processors due to fees. I process retail through POS software. Does each processor have different software, or can the software I have in my system be configured by any processor? I paid half the cost of software when installed & current processor paid the rest. Is this normal practice?

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Tom DeSimone August 13, 2015 at 3:58 pm

Hi Pat,

Most major POS systems are compatible with most major processors and payment gateways, but there are exceptions. Some POS software is proprietary and only works with certain processors.

Some merchant services providers will offer reduced cost or free POS as a bonus, but many do not. It’s important to do the math, because that POS discount might be counterbalanced with excessive fees elsewhere.

Good luck!

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Harrison July 30, 2015 at 10:48 am

What about the hidden credit card swipe fees charged by banks that increase credit card expenses for consumers? Are they standard, since credit card processors charge a swipe fee (Square charges 2.75% per swipe), while the banks charge a swipe fee too. There are even reported cases where a merchant might earn less in a sale than what the bank takes-in through these hidden swipe fees.

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone July 30, 2015 at 6:51 pm

Hi Harrison,

The banks and credit card networks charge fees, which are passed on to the processor, who in turn puts a markup on the fee and then passes it on to the business owner. Most of the money goes to the banks and the card networks. To learn more about this, check out our handy infographic!

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Linda Bracc July 16, 2015 at 2:47 pm

what website does each card association publishes their interchange and assessment fees

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Tom DeSimone July 16, 2015 at 4:17 pm

Hi Linda,

They each publish their rates on their own websites, usually as PDF documents. You can find the pages easily in Google by searching for Visa Interchange or MasterCard Interchange, etc. The charts are a little bit confusing, but very thorough.

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Lynn July 15, 2015 at 2:49 pm

Can anyone comment on what’s in the “outrageous” range for passing fees? I operate a “store within a store” concept. I pay rent to the merchant for the ability to sell my goods in his larger space. There are roughly 125 “dealers” selling vintage items and antiques. Recently, the merchant announced he would be charging all dealers 5% in card fees, up 2.5 points, with no explanation or rationale. This sounds like a “skimming” tactic to me. But, I don’t have enough knowledge on this tactic to know what’s considered normal and what’s not. 5% seems very high to me, and why not pass along to the customer, vs. the dealer middleman?

This comment refers to an earlier version of this post and may be outdated.

Tom DeSimone July 15, 2015 at 3:45 pm

Hi Lynn,

Five percent is very high. The actual cost for the merchant is probably closer to 2-3%, possibly less if a lot of debit comes through. If there are a lot of small sales coming through (like $10 or less), 4-5% is not completely out of the question because small sales cost a higher percentage. Also if there are a lot of AMEX transactions, that could justify a high rate. But really with 5% a certain amount is going to be profit for the merchant. Although there is also a chance that the merchant is getting overcharged by his or her credit card processor. Maybe you should refer them to our site!

This hike could be related to the upcoming switch to chip cards. Since there will be added cost to replace the credit card machines with new ones, the merchant may be trying to offset that cost by charging you more. I don’t think that is the right thing to do, but it might be the case.

Surcharging the customer is certainly an option, but according the the network rules the surcharge cannot exceed the cost to process the transaction. Chances are the merchant doesn’t want to lose sales or deal with angry customers, so instead decided to pass the cost to the sellers instead.

If possible, you might want to consider opening up an account with a mobile processor like Flint. Flint charged 1.95% for debit and 2.95% for credit.

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Karen June 25, 2015 at 1:55 am

Wouldn’t it be cheaper to use something like square at 2.75% then to pay all the bank fees? Anyone know?

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Tom DeSimone June 25, 2015 at 4:36 pm

Hi Karen,

It depends. For very low volume businesses, services like Flint, Square, PayPal, etc., can be much less expensive in terms of effective rate, especially if the average ticket size is very low too. But you give up some stability and versatility by going that route. For businesses processing over $10K monthly, even over $5K monthly in many cases, they will see substantial savings going with a traditional merchant account provider because the percentage markup will be lower and that percentage fee is what will make up the vast majority of their processing costs.

It really comes down to your business needs and processing habits. Check out our merchant account finder to see which option will be best for your business.

And here’s an article where we compare Square to other options.

This comment refers to an earlier version of this post and may be outdated.

James Trieb July 2, 2015 at 5:54 pm

Most companies and small business’s should always do a price comparison with another Merchant processor twice a year. That way you know what your current processor is doing for you. Some want you to sign a 3-5 year contract. Most Merchant processors will buy out your old contract up to $500.00 if, you switch with them. When an agent comes to you and want to do a comparison, say yes then and print up your last month’s billing statement give it to the agent. They will do the price comparison within 24 hrs.

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doug June 24, 2015 at 12:18 pm

I appreciate the great amount of information.
as I accepted a job at firm selling software, the owner passes on the 3.5% credit card processing fees to the sales reps. This doesn’t seem common practice to push the fee to the sales rep whom worked hard to make the sale.
I’m looking for best fees and rates and eCommerce examples where the sales people may be able to accept credit cards themselves (Ipad or other apps) and avod losing 3.5% off ther gross margins before commissons are paid out.
any tps, help examples, are appreciated.
Doug…

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Tom DeSimone June 24, 2015 at 3:06 pm

Hi Doug,

I think it’s crazy to essentially surcharge the sales rep for the client’s credit card payment. I’ve never heard of that before. If anything, the customer should incur the surcharge (which is allowed under network rules, with some stipulations). My suggestion would be to charge customers a convenience fee in order to cover the credit card fee if your employer insists that you must pay. You can also try to push ACH payments through a service like Dwolla. Look into Dwolla Direct. You can create a payment button and customers don’t even need to have a Dwolla account. Only $0.25 per transaction. If you need to accept payments from a mobile device, consider Flint Mobile. At least the rates will be a little lower (only 1.95% for debit).

Good luck!

This comment refers to an earlier version of this post and may be outdated.

The Complete Guide To Merchant Account & Credit Card Processing Fees

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