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The Complete Guide To Merchant Account & Credit Card Transaction Fees

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Hsin-Wei Luang

Hsin-Wei Luang

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

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296 Comments

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    Greg

    Hello,

    I was wondering if you could provide any feedback on the following rate I am being quoted compared to our current rates. Are there any other gotchas which may show up? Will the interchange rates be similar between both companies?

    Thanks in advance!

    Current Rates
    Interchange – Lists Varies
    Discount Rate – .49%
    Transaction Fee – $.05

    Quoted Rates for New Service
    Interchange – Lists Varies
    Discount Rate – .35%
    Transaction Fee – $.05

      This comment refers to an earlier version of this post and may be outdated.

      Jessica Dinsmore

      Hi Greg!

      My apologies for the delay! We’ve been prioritizing the PPP/EIDL questions, and unfortunately, there have been a LOT.

      Now, to respond to your questions! Assuming both companies you’re dealing with are honest, then the interchange numbers should be exactly the same. Interchange is what the credit card companies charge the processors, so the charges for Visa cards should be the same for all processors, the charges for Mastercard should be the same for all processors, etc. We sometimes hear that unscrupulous processors might try to bury a charge, which is why we say “assuming both companies are being honest,” and that’s why we pay attention to company reputation and honesty in our reviews.

      As to other gotchas, sometimes incidental fees can be unexpected and processors can hide additional charges there. Other times, if you have a lot of customers who are outside the country, international/cross-border charges can add up. Finally, reward/travel/similar cards have higher interchange rates, so, these charges can be a little surprising too.

        Jeff Citron

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

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

          Jessica Dinsmore

          Hi Jeff,

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

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

            Nikos Kabanopoulos

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

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

              Jessica Dinsmore

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

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

                Rachel Black

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

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

                  Jessica Dinsmore

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

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

                    Don

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

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

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

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

                      Jessica Dinsmore

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

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

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