Credit Card Processing: What to Know About Cost, Fees, and Use

Did you know that about 183 million Americans own credit cards? That’s an overwhelming majority of the population at seventy percent. Of those seventy percent, thirty-four percent own three or more credit cards.

With that many people owning credit cards, odds are that a majority of the payments you receive are in credit card payments.

What you may not be aware of is the fact that these transactions often come with things that can be hard to understand, such as card processing fees.

As a business owner, your job is to be able to understand the finer points of credit card processing so you can help your customers.

If you’re confused, don’t worry. All you need to do is keep reading and we’ll fill you in on all you need to know.


What Are Card Processing Fees?

Card processing fees are something that any merchant who wants to accept debit or credit cards as payment has to deal with. There are three main fees, plus a variety of additional or negotiable fees depending on what credit card service you choose.

Knowing which merchant you want to choose to work with is essential, as it will influence how many of these fees you pay and how much.

If you want to look for a low-cost card processor, there are several things to consider. Other than the percentage you pay per dollar you should look at contract length, termination fees, monthly rental fees, and EMV compliance.

Depending on the company you choose, here’s what you’ll have to deal with.

Payment Processing Fees

This fee goes to the processor- the company that takes care of making sure a given transaction was actually processed. Processors include companies like Stax, Square, and National Bankcard.

The company you go through determines how you get your fee. Generally, it can go one of the following three ways: per-transaction, a monthly service fee, or the cost of the service equipment.

The payment processor will either take this money from your account in one lump statement, or they will reduce the amount of your deposits by the fees due.


Assessment Fees

Assessment fees go to the major credit card provider. These are companies such as Visa, Mastercard, or Discover.

The average credit card assessment fee for major companies is around .14 percent. On the higher end is American Express, which charges a .15 percent fee.

Interchange Fees

Interchange fees go to the company or bank that issued your card. Some examples of these are Chase, Capital one, or JP Morgan. This is the largest fee, with an average of 1.5 percent to 3.3 percent.

Interchange fees are set by each network and change twice a year, in April and October.

There are certain risks that can influence your interchange fees; namely, whether you have a debit or credit card, the charge amounts, or the point of sale vs. card not present transactions.

Additional Fees

There are four additional fees that are non-negotiable and charged by every processing company. Fortunately, these rates do not change between the companies.

The first one is the Acquirer Processing Fee, or the APF. It’s a charge on all Visa credit card transactions.

The second one is the Fixed Acquirer Network Fee, or the FANF. It’s a charge on all brands of card, based on the presence of the card at the time of transaction as well as the location.

The third one is a kilobyte access fee, which is a per-transaction charge upon authorization.

Lastly, there’s the Network and Brand Usage Fee, or the NABU. Mastercard charges this for all settled or refunded transactions, whether credit or debit.

Negotiable Fees

These fees aren’t necessarily required for your business to process credit cards. Sometimes, you can try to negotiate with your merchant to see if the fees can be waived.

There are many kinds of negotiable fees. A small list of examples would be the monthly fee, account fee, batch fee, chargeback fee, or the hosting fee.

Having a merchant who is up front about these is important, as it will allow you not to be blindsided by any extra costs.

How to Cut Down on Card Processing Fees

Fortunately, there are some tricks that you can use to cut down on card processing fees.

As stated in the previous section, some fees are negotiable and can be talked through with your merchant. Doing this can help save you some extra money.

Another thing to do is make sure all systems are set up properly and that verification is in place. This both protects you from fraud and prevents any simple mistakes that could lead to bigger ones.

Lastly, there are things that you could do in your business. For example, you could have a minimum transaction fee to prevent many small transactions from boosting things too high. Many businesses have at least a ten-dollar limit.

Compare Credit Card Processor Prices Today

Now that you’ve learned all you need to know about the inner workings of card processing fees, you’re ready to move on to the next step in the process- getting a card processor.

Whether you’re just looking at getting your first one for an expanding business or already have one, it’s a good idea to compare prices. You want to know if you’re getting the highest quality machines at the most affordable rate.

To make sure you have the right deal for your business, compare prices here. 


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