Credit card processing fees are charges that a business has to pay in order to accept credit card payments from its customers. These fees are typically a percentage of the transaction amount, plus a fixed fee. The percentage-based fee is called the "interchange rate," which is set by the credit card networks (such as Visa and Mastercard) and is based on various factors such as the type of card being used and the risk associated with the transaction. The fixed fee, also known as the "assessment fee," is a charge that is added on top of the interchange rate and is used to cover the costs of maintaining the credit card network.
There are several different types of credit card processing fees that a business may have to pay, including:
- Transaction fees: These are fees that are charged each time a credit card is used for a purchase. They can vary based on the type of card being used, the type of business, and the type of transaction (e.g., online vs. in-person).
- Terminal fees: These are fees that are charged for the use of a credit card terminal, which is a device that businesses use to process credit card transactions.
- Monthly fees: Some credit card processors charge a monthly fee to use their services. This fee can cover the cost of maintaining the processor's systems and providing support to businesses.
- Setup fees: Some processors charge a one-time fee to set up a business with their services. This fee can cover the cost of getting the business set up and ready to accept credit card payments.
Overall, credit card processing fees can be a significant cost for businesses, and it's important for businesses to carefully consider these fees when choosing a credit card processor.
How Much Are Credit Card Processing Fees?
There are several types of fees that you may be charged when you process credit card transactions. Here is a list of some of the most common fees and a brief explanation of each:
- Interchange fees: These are fees that are charged by the card issuer (e.g., Visa, Mastercard, American Express) and are a percentage of the transaction amount. These fees typically range from 1.5% to 3.5% for domestic transactions and can be higher for international transactions.
- Markup fees: These are fees that are charged by the merchant services provider (e.g., Square, PayPal) for processing the transaction. These fees can be either a flat rate or a percentage of the transaction amount and are usually higher for transactions that are classified as "high risk" (e.g., online gambling, adult entertainment).
- Gateway fees: These are fees that are charged by the payment gateway (e.g., Authorize.net, Stripe) for facilitating the transaction between the merchant and the card issuer. These fees are typically a flat rate per transaction.
- Monthly fees: Some merchant services providers charge a monthly fee for their services. This fee may include access to a virtual terminal, technical support, and other features.
- Termination fees: Some merchant services providers charge a fee if you cancel your account before the end of your contract.
