Credit Card Processing Fees

If you’re a small business owner, you’ve probably been there before- trying to figure out how much those pesky credit card processing fees are going to cost you. Even if you’ve done your research, it can still be confusing trying to decipher all of the fees associated with credit card processing. That’s why we’ve put together this handy guide to help you understand exactly what those fees are, and how much they’ll cost you.

First things first, let’s start with the basics. Credit card processing fees are made up of two parts: the interchange fee and the processor’s markup. The interchange fee is set by the card issuer (Visa, Mastercard, etc.) and is the same for all processors. The processor’s markup, on the other hand, is the fee that the processor charges for processing the transaction- and this is where things can get a bit confusing.

Most processors will charge a flat rate per transaction, plus a percentage of the total sale. So, for example, if you’re selling a product for $100 and your processor charges a flat rate of $0.30 per transaction plus 2.9% of the total sale, your total fee would be $3.20 ($0.30 + $2.90).

Now that we’ve got the basics down, let’s take a look at some of the other fees that may be associated with credit card processing.

One of the most common fees is a monthly statement fee. This is a flat fee that is charged each month, regardless of how many transactions you process. Statement fees can range from $5-$25 per month, so it’s important to factor this into your overall costs.

Another common fee is a monthly minimum fee. This is usually assessed if your total processing fees for the month are below a certain amount- typically $25-$35. So, if your total processing fees for the month are only $10, you would be charged the difference of $15-$25 as a minimum fee.

You may also see fees for things like chargebacks, refunds, and declined transactions. Chargebacks occur when a customer disputes a charge with their credit card issuer- and if the issuer sides with the customer, the merchant is responsible for paying the associated fees. Refunds happen when a customer returns merchandise or cancels a service- and just like with chargebacks, the merchant is responsible for paying the associated fees. Declined transactions occur when a customer’s credit card is declined for whatever reason- and while there is typically no fee charged to the merchant, it can still result in lost sales.

Finally, you may also see a fee for PCI compliance. PCI compliance is a set of security standards that all merchants who process credit cards must adhere to. In order to be PCI compliant, you’ll need to fill out a self-assessment questionnaire and possibly complete an on-site security assessment. The fees associated with PCI compliance can range from $50-$500 per year, depending on the level of compliance your business needs.

Now that you know all about credit card processing fees, you can start to shop around for the best rates and fees for your business. Be sure to ask lots of questions and read the fine print so that you fully understand what you’re being charged for. And always remember- the cheapest option is not always the best option. When it comes to credit card processing, it’s important to find a balance between cost and quality- so that you can provide your customers with the best possible experience.

We hope this guide has been helpful in understanding all of the fees associated with credit card processing. If you have any further questions, please feel free to contact us anytime

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