The Complete Guide to Credit Card Processing Rates & Fees

• 243 comments
• Updated on: Aug 23, 2018
• Posted by: Amad Ebrahimi

Credit card processing fees are extensive, complicated, and can be overwhelming. Nevertheless, you have to pay them if you want to process credit cards through your business. Rather than paying these charges blindly, you might as well make an effort to understand them. That way, you can dispute any costs you think are unfair or get a better understanding of your true overhead. Hopefully, this guide will help you do just that.

This is quite the jigsaw puzzle of a topic, with each piece requiring some understanding of the other interlocking pieces. For this reason, we’d encourage you to read this guide all the way through to view the completed puzzle in all its glory. By the same token, if you need to jump to a particular section to get clarification on a specific concept or fee, you’re welcome to find that first, and then go back to fill in the gaps as needed.

If you’re pressed for time and trust our judgment here at Merchant Maverick, then I suggest you take a look at our top-rated credit card processors. They all offer very fair and competitive rates and don’t charge any bogus fees. If you prefer to learn about this stuff yourself, then read on!

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Our Top Picks For Credit Card Processing

Credit Card Processing Rates

Most merchants know the processing rate(s) they were quoted when they signed up for an account, or have at least seen rates advertised by various processors. So, why does one processor offer a rate of 0.20% + $0.10, while another promotes 2.9% + $0.30? That’s a big difference! The simplest answer is this:

Some quoted rates are only a processor’s markup over the wholesale cost of transactions, while others are a blend of the wholesale cost and the processor’s rate markup.

You’ll learn more about wholesale costs and markups later in this guide, as well as how different pricing models have evolved to cover both categories of cost. For now, check out the table below for example rates from the four main pricing models, along with what’s happening to the wholesale cost behind each transaction.

Sample Quoted Payment Processing Rates

Of course, your processing rate is just one component of your overall cost. You must consider the entire package of rates and fees with your provider, which we’ll help you understand as we go along.

Types Of Merchant Account Fees

Next, let’s look at the general types of rates and fees you’ll see on a merchant fee schedule or processing statement. We’ll get into detailed examples of each type of fee in another section.

Transactional Fees
These fees are assessed every time you run a transaction (like your processing rate we’ve just discussed). They usually represent the biggest cost of operating a merchant account. 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.

Scheduled Fees
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.

Incidental Fees
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 the fee will not be charged.

Parties Involved

Before you can 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 merchant. They include:

• Credit Card Associations: These are obviously the companies that create the credit cards, like Visa, MasterCard, and American Express. These are the guys that set the rules.
• Credit Card Issuing Banks: These are the financial institutions that issue the credit cards, like Chase, Citi, and Wells Fargo. Some card associations take on the role of a bank as well, developing and issuing their own cards. Examples include Discover and American Express.
• Credit Card Processors: Also known as Acquiring Banks or just Acquirers, these institutions act as messengers between merchants and credit card associations. They pass batch information and authorization requests along so that merchants can complete transactions in their businesses. A merchant may encounter several acquirers for one transaction–one that creates monthly statements, one that handles technical support, and one that issues money to a bank account.
• Merchant Account Providers: These are companies that manage credit card processing (e.g., sales, support, etc.), usually through the help of an acquirer. They could be financial institutions, independent sales organizations, or double-duty acquirers, depending on the situation.
• Payment Gateways: These are special portals that route transactions to an acquirer, usually in the case of an online shopping cart.

Card Payment Transaction Flow

In any given transaction, the above-mentioned parties play a role. Here’s a graphic to help you visualize the flow of a typical credit card transaction. (Note: Credit Card Processors and Merchant Account Providers usually fill overlapping roles within a transaction, so that’s why you only see “Credit Card Processor” listed below.)

It’s also worth noting that because American Express acts as both the credit card association and the credit card-issuing bank, the Amex fee setup and terminology is a bit different. However, the OptBlue program has brought Amex closer in line with the other associations in recent years in terms of both functionality and pricing. Check out our article on Amex rates and fees for more information.

Wholesale Vs. Markup Merchant Account 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 above 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 Credit Card-Issuing Banks (Interchange Fees) and the Credit Card Associations (Card Association Fees)
• Fixed amounts regardless of which processor you use
• Non-negotiable

Markups

• Go your Credit Card Processor and Payment Gateway, plus any other add-on equipment or software providers
• Different amounts from processor to processor
• Negotiable

As the merchant, you’re the lucky one who ultimately covers all these costs. Meanwhile, your credit card processor (more specifically, your Merchant Account Provider) sits right at the middle of the fee collecting-and-directing process. This company decides how to pay the necessary wholesale costs for running your account — while also adding markups to cover its own costs, paying other third-party service providers associated with your account, and even making a profit itself. A very important job, indeed!

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 and 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.

The Importance of Interchange

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

Each card and transaction type has a specific interchange fee set by the corresponding card association, and that 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.

Common Interchange Rate Examples

Due to this 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 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 businesses 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.

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

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 that overview, let’s examine the more nuanced differences between each model:

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, 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, and 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 of determining 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 transaction 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 blended rates (like Stripe and PayPal) usually do not charge a monthly fee, this pricing model often makes sense for low-volume businesses.

Breakdown Of All Credit Card Processing Fees

We’re finally ready to tackle some individual fees! The list we’ve compiled is a general reference for the most common fees out there in the processing world, along with their typical price ranges . 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, 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 Merchant Account Provider “at cost,” marked up by your provider, 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.

We’ve included a summary table for each general category of fee (transactional, scheduled, incidental), followed by detailed text descriptions if you want to learn more about a particular charge. Let’s get to it!

Transactional Card Payment Fees

Wholesale

• 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 make up a smaller portion of your total card processing costs than interchange fees. The primary type of card association fees are called assessments, and 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, Amex publishes a few, and Discover restricts access. Therefore, we recommend using our full list for reference.

Markup

• 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 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 processors true margin is. See the Pricing Model section for more info.

Scheduled Card Payment Fees

Wholesale

• 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 ($3 per location annually for payment facilitators like Square.) This is the wholesale amount, but how and when your processor charges you will vary.
• 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

• 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. They have a plan for just $5 per month. 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 as a percentage of transaction volume on other plans.
• 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.
• 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 pay 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 like 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 POS software through your processor, this fee will cover that. In some cases, a 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 Fees: These are fees paid to your processor either for noncompliance or compliance with standards set by the Payment Card Industry. In the case of non-compliance, you have to pay because your business is not upholding PCI standards, which could cost you even more money in the long run. 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.
• IRS Report Fee: These are fees that merchant account providers charge in exchange for reporting transaction information to the IRS (1099-K).

Incidental Fees

Wholesale

• 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 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

• 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, 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.
• 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.

Finding the Lowest Credit Card Processing Rates & Fees

We wish there was a simple solution here, but the truth is that it depends on several factors. No two business situations are exactly alike. But we can give you some guidance with a few real-world examples.

Take a look at these three common credit card processing quote types:

	Test Case #1	Test Case #2	Test Case #3
	Our Review Visit Site	Our Review Visit Site	Our Review Visit Site
Pricing Structure	Membership	Interchange-Plus	Blended
POS and Other Features Included	Yes	Yes	Yes
Rate Matching/Negotiable	Yes	Yes	No
Retail Rates (Markup)	0.00% + $0.10 markup	0.20% + $0.10 markup	2.75% total
Monthly Fee (Markup)	$79	$10	$0
Markup on 200 x $100 transactions in a month	$99	$80	About $354
Markup on 50 x $1,000 transactions in a month	$84	$155	About $660
Markup on 500 x $15 transactions in a month	$129	$72	About $23
Best Choice For	Mid/large transaction size, Mid/high monthly volume	Mid/low transaction size, Any monthly volume	Small transactions, Low monthly volume

As you can see, the best pricing option for you will depend on your total volume and average transaction size. You have to do the math for your unique situation every time. But you can use our “best for” guidance above to get on the right track.

Summary

Every credit card and merchant account provider 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.

FAQ For Credit & Debit Card Processing Cost

Can my customers cover processing fees in the form of a surcharge?
Along with general pros and cons of this strategy, there are strict rules governing surcharging customers that you must know, and it’s also a state-by-state issue. Check out our article on surcharging for the full scoop.

I have (business type) with ($ processing volume). Which of your top-rated processors will give me the best pricing?
We’d first suggest that you consult our test case examples in the above section 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 compete 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 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.

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Amad Ebrahimi

Founder at Merchant Maverick

Amad has worked in the eCommerce and online marketing world since 2002. He started as an eBay seller, then slowly graduated to building & marketing his own websites and consulting others to do the same. He founded Merchant Maverick out of frustration with all the misinformation and shady tactics that he encountered when trying to find a merchant account for his and his client's businesses. He's the man behind most of the merchant account reviews, and articles posted on MerchantMaverick.com. Have any questions related to credit card processing? Talk to him.

@awaken

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Latest posts by Amad Ebrahimi (see all)

• Learning About the Terminated Merchant File (TMF) aka MATCH List - August 29, 2018
• The Complete Guide to Credit Card Processing Rates & Fees - August 23, 2018
• 7-Years and Counting! - July 12, 2016
• We Want Your Feedback! - February 17, 2016
• 3 Things Every Merchant Should Know About Credit Card Chip Technology - October 16, 2015

243 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.

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!!!

Reply

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.

Reply
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.

Reply

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.

Reply
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?

Reply

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.

Reply
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.

Reply

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.

Reply
Ashley Sawdon January 23, 2019 at 12:55 pm

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

Reply
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

Reply

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.

Reply
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

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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!

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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

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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!

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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!!

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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.

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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

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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!

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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!

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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.

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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

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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!

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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

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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.

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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

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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?

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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.

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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?

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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.

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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 ?

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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.

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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?

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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?

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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.

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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.

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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?

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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.

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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?

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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!

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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.

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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.

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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

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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.

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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!

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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 .

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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?

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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!

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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.

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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.

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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.

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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!

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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?

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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.

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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!

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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.

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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.

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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.

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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.

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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?

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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!

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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

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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.

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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?

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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.

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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!

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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.

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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

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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?🤤

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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.

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Michael Spetko March 22, 2018 at 9:53 pm

Donald no that’s very high.

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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

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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.

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shihan August 30, 2017 at 3:12 am

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

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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.

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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?

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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.

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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

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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

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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 ?

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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.

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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.

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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

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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.

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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

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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.

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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.

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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. 😉

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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.

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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.

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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

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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.

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Freida May April 3, 2017 at 5:52 pm

Looking for a good processing company.

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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.

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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

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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.

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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

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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.

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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?

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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.

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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 ?

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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.

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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

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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.”

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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

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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.

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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.

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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?

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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.

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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!

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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.

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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

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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.

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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

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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.

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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

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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.

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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?

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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.

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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?

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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.

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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???

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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.

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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.

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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.

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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.

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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.

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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!

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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.

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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!

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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.

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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!

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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.

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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

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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.

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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?

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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.

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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

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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

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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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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!

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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

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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?

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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.

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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!

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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

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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

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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.

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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

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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

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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.

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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?

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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.

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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.

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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.

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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?

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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.

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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.

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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!

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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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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.

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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?

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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.

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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.

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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.

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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?

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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.

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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?

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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.

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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!

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