Complete Guide to Credit Card Processing Fees and Rates

1. The Complete Guide To Credit Card Processing Fees And Rates Cash discount on credit card processing fees Cash discount on credit card processing fees can be extensively complicated and confusing. If you prefer to have the option of accepting payments through credit cards, you must know that there would be costs associated with it. Most of these costs can be negotiated. However, it would be ideal for you to choose a third party payment processing company that has cheap rates of fees. Whether you’re a small business owner or a large one, credit card processing fees are unavoidable with most of the processing companies. What can be avoided is paying too much, or getting billed fees that you’re not supposed to be paying. There are companies that operate with zero fee credit processing strategy, these are those that charge you a rental instead.

2. Free credit card processing is only possible if you’re will to invest more in the beginning to save more in the future. The credit card payment processing company should be transparent in disclosing every kind of fee to you before you agree to their terms. The fee of 2 to 5% on every transaction that you pay, comprises of fees for services you might not be taking advantage of. In case you have been paying hidden fees and would like to know what they are, you have an option to dispute the fees with the company to get a clearer picture. To understand this better below are the details about parties involved Free credit card processing: 1.The Associations: You definitely have heard about Visa, MasterCard, American Express, etc. these are big branded associations that set up all the rules related to usage, terms and conditions, privacy policy, fee and penalties, etc. The concept of credit cards was created by them, therefore they become the operational heads of the complete procedure. 2.The Banks: The banks issue credit cards. For example; Citi Bank Visa, J.P Morgan Chase MasterCard, etc. However, even financial institutions like American Express issue credit cards on their own. 3.The Credit Card Processing Companies: •These are third party merchants. They act as an intermediary between the financial institution, the bank and the retailers. Passing batch information and authorizing transaction requests is conveyed via credit card processors. The

3. business transactions go through credit card terminals provided by these companies. •There are certain kinds of fees associated to using this service. Many merchants believe in surcharging the customers to cover the cost of this fees. The companies that has free credit card processing fees policy might charge a small amount of rental for the service. This is advised mainly for small merchants to save money. 4.Merchant Account Providers: The credit card processing is managed by these providers. They take the help of the acquirer to manage departments of sales, support, etc. The acquirer could be financial institutions, double-duty acquirers, or other that they could come in the picture according to the kind of business. 5.The Payment Gateways: Payment Gateways are now getting more popularity than ever. PayPal for example, it is now the most popular online payment method. Gateways like these are portals that take the help of acquirers to process online payment transactions. Now that we know the parties involved in credit card processing, we must talk about the fees required for the operation of the process. There are two categories of fees charged to you under which there are other categories. These two main categories are; 1. Base Fees: The base fees is mainly the wholesale or pre-markup fees that is charge to you by the credit card issuing bank and the associations. These are the fees charged to you before the third party credit card payment processing company charges you any amount of

4. money. These are consistently charged to you on every transaction you make. Visa and MasterCard are known to be cheaper and provide more discounts than others. 2. Markup Fees: The markup fees is mostly negotiable. The cheap credit card processing companies tend to give you a discount on this if they find you eligible for it. A cash discount on credit card processing can save you from paying high fees. Always ask your processor to lower this fee down for you and be transparent about the fees they charge you just in case they’re using some other term instead of markup to charge you. Now to discuss about the different categories of fees that fall under base fees and markup fees; 1. Transactional Fees: •The transactional fees occur every time you process a payment for a customer. The rates can differ from company to company. This fees will fall cheaper to you if your card processing company is transparent in terms of discussing all the fees charged to you and if you have any hidden charges you should know about. It is advised to hire a company with cheap credit card processing rates so that you save in the long run. These are a few points about transactional fees; oThese are charged for each transaction. oThey represent the fees the merchants are expected to pay per sale on a monthly basis. oThe credit card processing fees could be anywhere around 2 to 5% of the sale amount. oThe assessments would be dependent on the number of transactions per month.

5. oThe assessment merchant account fees might be non-negotiable if they are NABU/APF/data usage fees, merit 1/e-commerce/CNP, and dues. oThe markup fees would be around 0.28 to 0.50% quoted by your card processing company. 2.Flat Fees: Flat fees are charged in addition to transactional fees. This fee is not always charged by every merchant. If it is charged to you, you will notice them being charged to you every time and there would be variations in value, the names and applicability of the fees. Some of them do not show up on your monthly statement. Under flat fees there are other categories of fees that can be described as follow; Terminal Fees: •Merchants who have physical stores use creditcard terminals for payment processing. The fees is charged to them every time the terminal is used. The credit card is swiped in these machines. You have the options to either lease terminal or buy them. It is advisable to buy these terminal at a cheap rate because leasing will not help you save money in the long run. Payment Gateway Fees: •This is a fee charged to merchant who have an online business, also known as ecommerce business. Many payment gateways come free credit card processing. There will be other charges but your processing rate would be zero.

6. Payment Card Industry Fees: •These are the fees charge by the payment card industry. These are charge in the case of compliance or non-compliance. If your business is not holding PCI standards it is non-compliant and you have to pay this fee. This ends up costing you too much money in the long run. •However, if your business is compliant you will only have to pay the merchant account provider so that your business is in line with the norms. You should always check whether your service provider is charging you for this or not. Yearly Fees: •This is an annual fee that you pay for using the terminal or the payment processing service of the third party payment processing company. There are many service providers who refrain from charging this fee to you. Monthly Fees and Monthly Minimum Fees: •These are fees you pay every month for the call center and support costs. This fee should be cheaper than any other fees charged to you. The monthly minimum fees is charged in case you do not reach a minimum number of transactions in a month. You must go for the service provider that doesn’t have this fees in their policy. Statement and Online Reporting Fees: •The Statement fee is an amount of money you pay your card payment processing company for covering up the cost of mails, cover printing, and monthly card statements. Online reporting fees.

7. Network Fees: •This is a fee that is non-negotiable and is charged by the associations directly to you. To save money, you should look for the association that charges cheaper rates. 3.Incidental Fees: Incidental fees occur to you according to the incidents. Every time a charge back occurs you are charged this fees. In cases where there is no disputes you most probably not see any incidentals. These are the types of incidental fees; AVS (Address Verification Service): •If you have a telephone order or an e-commerce business there might be an AVS fee that you should be careful about because it will be charged on every transaction you make. Request Fee for Retrieval and Chargeback: •Every time there is a dispute generated by your customer, there is a chargeback and this results in a fee being charged to you. After the first step of retrieval, the chargeback occurs. NSF Fee: •This is a non-sufficient fund fee charged to you only in case you lack funds in your back for covering the merchant account expense.

8. Batch Fees: •The batch fee occurs when you submit a batch of charges. It can happen once or twice in a day. VAF (Voice Authorization Fee): •There would be a toll-free number that would be need to call at times to verify information while processing transactions. This is done to check the authenticity of the card for the payment. You will be charged a negligible amount of fee for this. Steps for save money on credit card processing fees •To save money on credit card processing fees you have take certain steps to reduce the fees and make possible changes to the fee structure. There are two basic ways to lower credit card processing Surcharge Processing and Cash Discount on Credit Card Processing. Let’s elaborate on the topics; Surcharge Processing: •The surcharge is what your customers pay you on top of the tax you charge them for their purchases. This is the fee that you pay your credit card processing company. Even if you are working with a cheap credit card processing company, you always are paying fees. •Especially when you’re giving out discounts to your customers, you feel the pinch of this fees. So in this case what you can do is you can reduce the price of the products as they are in discount and charge them a surcharge if they use their credit card. This is what surcharge processing is. You can set up a flat rate

9. of charge for no matter what they buy, using a credit card would cost them that much as a fee. Cash Discount on Credit Card Processing fees: •This is an option merchants prefer to use if they do not get a zero fee credit processing company to help them save money. In this case if the customer buys a product using cash, the cost of the product is lesser than what he would have to pay using a credit card. •This is not a surcharge because there is no fixed rate or charge on top of the tax. It is just a difference in price because of the difference in payment method. If you do not want to surcharge or have to make differences in pricing, you should look for a cheaper or free credit card processing company. •Surcharge processing is legal and you can take advantage of that as long as the rate of surcharge is a flat rate. However, for a Cash Discount on Credit Card Processing you will need to keep the following points in mind; Legal terms: •Cash discount programs differ according to the provider you choose. Make sure that your provider is aware about the program and have allowed you to run it. Equipment: •The provider’s terminals should accept all types of credit cards, EMV chip cards and mobile wallet payments. The program of cash discount should work, the provider of automated cash discount POS technology should follow the federal compliance laws as well.

10. Hidden Fees: •Many credit card payment processing companies charge hidden fees because of which the overall fees look too much. So if you’re running the cash discount program, make sure you’re aware about the hidden fees if any, and if possible waive it for the customer for better relationship. Options of Fees •If you are associated with a reputed payment processing company, you will be provided with two types of service fee options; flat fees or a percentage on every transaction. As you’re running a discount program, flat fees would be an ideal choice of fee option for you. Supporting Materials: •You can offer supporting materials like videos and guidebook, in-store signage, reference handouts for customers to know more about the Cash Discount on Credit Card Processing program.