When you accept credit card payments from your customers, there is no way to avoid credit card processing fees. But, these costs are worth the expense because of the increase in sales volume that is available. It is estimated that around 80% of shoppers in the United States prefer using a credit card over cash. So, you need to be sure that you accept the payment forms that your customers would like to use.
Why Merchant Fees are Charged
Various costs go into the services that are required for credit card processing. These payment processing expenses might include:
- Security features for payment data
- Benefits and rewards for the credit card service
- Call center and customer service expenses
- Overhead and administrative costs
Types of Fees You Can Expect
It is common for an “interchange” or “base” rate to be charged for the credit card processing. These charges are non-negotiable, and the rates are set by the credit card associations and banks that issue the cards. No matter what, all merchants pay these fees.
Additionally, it is common for a “retail” rate to be charged, which is the markup fees for the credit card. This cost is charged by the payment processor to cover the risks that are possible from accepting credit card payments. For example, data breach, chargebacks, and fraud cost the credit card company money. So, these fees need to be high enough to cover the expenses while still leaving profits left over for the payment processing company.
The exact amount of the retail rate will vary depending on the perceived risk of your company and the volume of transactions that will be processed. You will need to qualify for the rate that is offered by the payment processor.
Sometimes, extra fees are incurred depending on the services that you choose, such as:
- Recurring fees for monthly or annual charges
- Payment gateway fees
- PCI Compliance expenses
- POS terminal fees
- Early contract termination
- Paper statement costs
If you want to minimize your payment processing fees, then we invite you to discuss your options with our experienced team. We are here to help you maximize your payment processing services while minimizing the expenses whenever possible.