Paying processing fees is not liked by any business owner especially if these extra fees can be avoided. Looking through merchant service bills and statements can take up a lot of time especially if you do not understand the credit card processing technical terms. When you accept payment from your customer through credit cards you pay a certain fee to accept that payment and that is credit card processing fees. There are many fees along with these fees that are charged such as flat fees, transaction fees and incidental fees. These fees are all the expenses that you pay to be able to process payments.
Credit card payment processing firms sometimes charge additional fees for a lot of things like set up fees and PCI compliance fees. The average credit card processing fees can be 1.7 per cent for swiping to 3.5 per cent for keyed-in transactions. Credit card processing fees can be difficult to understand so it is difficult to determine for business owners if they are paying a lot more processing fees than they should. Here we have listed some methods to use if you wish to avoid additional credit card processing fees.
What Fees am I paying for?
You should always read your bill properly to ascertain everything you are paying for. To know where to save, you must know exactly what you are paying for. For example, a transaction fee is something that is charged extra on every swipe fee which is billed along with interchange and percentage mark-up. They can be from 0.08$ to 0.30$.
Transaction fee– Interchange rate, payment processing mark-up and assessment fee together make up the transaction fees. They are charged on every transaction.
Recurring fee– These fees are dependent on your merchant services provider and are usually charged monthly. This fee is the expense to be paid to use the payment processing service. Usually, a small business owner does not know what she/he is paying for and many merchant service providers misuse that and make a lot of profit. If you read your statement properly and ascertain these fees, you can save a lot of money.
- Monthly Minimum Fee
- Statement fee
- Batch fee
- The next day funding fee
- Annual fee
- IRS report fee
Onetime fee- These one-off fees are charged when you set up your merchant account, at the start, middle and end of it. You pay an extra one off fees for PCI compliance, address verification and payment gateway fee after you have paid the setup fees. There are many more one time fees charged. You are asked to pay retrieval and chargeback fees in case your customer asks for a refund. Many merchant service providers also include termination fees as their one-off fees.
Average Credit Card Processing Fees
Listed below are some of the average credit cards processing fees for the biggest credit card providers-
- Visa: 1.43% – 2.4%
- MasterCard: 1.55% – 2.6%
- American Express: 2.5% – 3.5%
- Discover: 1.56% – 3.5%