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The Complete Guide To Credit Card Processing Rates & Fees

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Amad Ebrahimi
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.
Amad Ebrahimi
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273 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.

    Tom Reeves

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

      Amad Ebrahimi

      Hi Tom,

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

        lucknow to kannauj

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

          Emily Hale

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

            Unwanteduk

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

              John

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

                John

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

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

                  Emily Hale

                  Hi John,

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

                    Donny N

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

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

                      Emily Hale

                      Hi Donny,

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

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

                        Vineet Kayal

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

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

                          David

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

                          Thanks
                          David

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

                            Emily Hale

                            Hi, David!

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

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

                              Fred

                              Hello,

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

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

                              Is that allowed?

                              Thanks in advance for your thoughts.

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

                                Emily Hale

                                Hi Fred,

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

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

                                  Rick Lan

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

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

                                    Dakota Fillet

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

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

                                      Zoe

                                      Hi,

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

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

                                        Jessica Dinsmore

                                        Hi Zoe,

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

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

                                          Michael

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

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

                                            Jessica Dinsmore

                                            Hi Michael,

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

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

                                              John Marchiony

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

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

                                                Jessica Dinsmore

                                                Hi John!

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

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

                                                  Mathew

                                                  Hi,

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

                                                  Thank you,

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

                                                    Jessica Dinsmore

                                                    Hi Matthew,

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

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

                                                      Doug

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

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

                                                        Jessica Dinsmore

                                                        Hi Doug,

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

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

                                                          Adam

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

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

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

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

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

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

                                                            Jessica Dinsmore

                                                            Hi Adam,

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

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

                                                              tony

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

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

                                                                Jessica Dinsmore

                                                                Hi Tony,

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

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

                                                                  AMO

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

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

                                                                    Jessica Dinsmore

                                                                    Hi AMO,

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

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

                                                                      Dawn Diehl

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

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

                                                                        Jessica Dinsmore

                                                                        Hi Dawn,

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

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

                                                                          Scott

                                                                          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.

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

                                                                            Jessica Dinsmore

                                                                            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.

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

                                                                              Ashley Sawdon

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

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

                                                                                Rosette

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

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

                                                                                  Jessica Dinsmore

                                                                                  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.

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

                                                                                    Carol OConnor-Zeinz

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

                                                                                    these are the current fees –

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

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

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

                                                                                    What’s your opinion or review of Merchantone?

                                                                                    Carol

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

                                                                                      Jessica Dinsmore

                                                                                      Hi Carol,

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

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

                                                                                        Jay

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

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

                                                                                          Jessica Dinsmore

                                                                                          Hi Jay,

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

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

                                                                                            Colton RIckard

                                                                                            Hi!

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

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

                                                                                            Thanks!!

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

                                                                                              Jessica Dinsmore

                                                                                              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!

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

                                                                                                Jay

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

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

                                                                                                  Jessica Dinsmore

                                                                                                  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.

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

                                                                                                    CR

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

                                                                                                    Thanks

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

                                                                                                      Jessica Dinsmore

                                                                                                      Hi CR!

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

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

                                                                                                        Blair

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

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

                                                                                                          Jessica Dinsmore

                                                                                                          Hi Blair!

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

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

                                                                                                            Angela

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

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

                                                                                                              Jessica Dinsmore

                                                                                                              Hi Angela!

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

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

                                                                                                                Bart

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

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

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

                                                                                                                  Jessica Dinsmore

                                                                                                                  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.

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

                                                                                                                    Tito Bravo

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

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

                                                                                                                      Jessica Dinsmore

                                                                                                                      Hi Tito,

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

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

                                                                                                                        Mike

                                                                                                                        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!

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

                                                                                                                          Jessica Dinsmore

                                                                                                                          Hi Mike,

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

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

                                                                                                                            Tony

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

                                                                                                                            Thank you
                                                                                                                            TonyD

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

                                                                                                                              Tom DeSimone

                                                                                                                              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.

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

                                                                                                                                Dee

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

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

                                                                                                                                  Jessica Dinsmore

                                                                                                                                  Hi Dee,

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

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

                                                                                                                                    Cindy

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

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

                                                                                                                                      Jessica Dinsmore

                                                                                                                                      Hi Cindy,

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

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

                                                                                                                                        Mike

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

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

                                                                                                                                          Jessica Dinsmore

                                                                                                                                          Hi Mike,

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

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

                                                                                                                                            chris

                                                                                                                                            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

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

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

                                                                                                                                                Jessica Dinsmore

                                                                                                                                                Hi Andrea,

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

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

                                                                                                                                                  Vinod

                                                                                                                                                  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

                                                                                                                                                    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

                                                                                                                                                      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

                                                                                                                                                        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

                                                                                                                                                          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

                                                                                                                                                            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

                                                                                                                                                              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

                                                                                                                                                                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

                                                                                                                                                                  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

                                                                                                                                                                    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

                                                                                                                                                                      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

                                                                                                                                                                        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

                                                                                                                                                                          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

                                                                                                                                                                            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

                                                                                                                                                                              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

                                                                                                                                                                                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

                                                                                                                                                                                  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

                                                                                                                                                                                    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

                                                                                                                                                                                      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

                                                                                                                                                                                        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

                                                                                                                                                                                          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

                                                                                                                                                                                            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

                                                                                                                                                                                              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

                                                                                                                                                                                                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

                                                                                                                                                                                                  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

                                                                                                                                                                                                    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

                                                                                                                                                                                                      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

                                                                                                                                                                                                        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

                                                                                                                                                                                                          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

                                                                                                                                                                                                            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

                                                                                                                                                                                                              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

                                                                                                                                                                                                                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

                                                                                                                                                                                                                  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

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

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                                                                                                                                                                                                                      Jessica Dinsmore

                                                                                                                                                                                                                      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

                                                                                                                                                                                                                        Donald no that’s very high.

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                                                                                                                                                                                                                          Bill Roland

                                                                                                                                                                                                                          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

                                                                                                                                                                                                                            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

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

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                                                                                                                                                                                                                                Jessica Dinsmore

                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                    Looking for a good processing company.

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                                                                                                                                                                                                                                                                      Chloe Bahal

                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                      Hi Tracy,

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

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                                                                                                                                                                                                                                                                                        Chad

                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                          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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                                                                                                                                                                                                                                                                                                            Michael

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

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                                                                                                                                                                                                                                                                                                              JB

                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                    Hi Ken,

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

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                                                                                                                                                                                                                                                                                                                                                                      Tho Phung

                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                          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

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

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                                                                                                                                                                                                                                                                                                                                                                              Ashley

                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                                  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

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

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                                                                                                                                                                                                                                                                                                                                                                                                                      Chloe Bahal

                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                          Hi Arran,

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

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                                                                                                                                                                                                                                                                                                                                                                                                                            Chris B

                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                                                                            Hi Calvin,

                                                                                                                                                                                                                                                                                                                                                                                                                                                            I am going to contact you via email.

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                                                                                                                                                                                                                                                                                                                                                                                                                                                              William Engstrom

                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                Hi Bill,

                                                                                                                                                                                                                                                                                                                                                                                                                                                                I would recommend taking a look at Square.

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                  George Tsatsos

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

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

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Nick

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Looking for a new company that handles my credit card machines

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Dhruv Sehgal

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Cindi,

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

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Shariq

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                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

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

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Lawrence

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

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

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Tom DeSimone

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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

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

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Tom DeSimone

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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

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

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Tom DeSimone

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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…

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Tom DeSimone

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Hi Doug,

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Good luck!

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

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