Credit card processing fees are paid by merchants for each credit card or debit card transaction. The fee is predetermined by your merchant services provider and usually involves the following components: interchange fees, assessment or service fees, and any markup.
How much are processing fees?
Typically there are several factors that go into the merchant’s credit card fees. We break them down and suggest reading them to better understand how much you and other businesses are paying — and more importantly what you can do to dramatically lower these costs.
Flat pricing is exactly what it sounds like. You pay one flat fee for all transactions. This usually hovers between 1.75% – 3% and includes a per transaction fee.
Tiered plans group different card types and card member associations into “tiers” — most typically three general rates. So depending on the card a customer uses, you’ll be charged one of three rates that applies to that transaction. This includes gift cards, reward cards, American Express vs. Mastercard, etc.
If you’re currently on tiered pricing, it may be worth analyzing what types of cards your customers pay with most often and consider switching to interchange pricing if you have the chance to save money.
Interchange pricing is the most granular approach to pricing. Every cardmember association charges different processing fees depending on the card and manner in which it was run, so instead of bundling them together into a flat rate, interchange pricing just charges based on the card type and a small fee called the discount rate on top of that.
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