Cost of Credit Card Payments

You may have heard the saying, “There’s no such thing as a free lunch,” and it certainly applies to business. Take card processing fees as an example. If you want to allow your customers to pay via credit card, you need to pay credit card processing fees. The only other option is to not accept cards at all, which will drive some business away.
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How Much Are Processing Fees?

Average credit card processing fees are a few percent per transaction. While that can seem like a small price to pay in exchange for getting more customers who want to pay with credit, processing fees can take a bite out of your profits.

When you’re looking for a credit card processor, you’ll want to compare prices and find an affordable solution. To do so, you need to understand what processing fees are. These costs are actually made up of a few parts:

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Transaction fees

This number is the few percent rate we mention above. It’s made up of the interchange rate, the payment processor fee and the assessment cost. The interchange rate is the fee charged by the credit card issuing bank. The assessment fee is a cost assigned by the card network and is based on the credit risk a business poses. The payment processor fee is what your payment processor charges for their expenses and work.

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Flat fees

This number is a fixed per-month fee that you pay for your merchant services provider in exchange for their services.

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Incidental costs

In addition to the above fees, most services will charge you extra if there are chargebacks or other added costs for transactions.

Finding Low-Cost Credit Card Processing

Of course, you don’t want to overpay on credit card processing. While it can seem tempting to simply compare the processors and choose the one with the lowest costs, doing so is not the best idea. Cut-rate processors are known for cutting corners on service and sometimes security. You don’t want hours or days of downtime because you can’t get help. You also don’t want your company’s reputation affected because a processor was not careful with security.

There are a few ways to get quality credit card processing services without sacrificing service and safety:

  • Compare payment processors on price and quality.
  • Look for transparent companies that are honest and upfront about costs and fees.
  • Avoid long-term and ironclad contracts with processors that allow the rate to go up.
  • Understand how fees work so that you can negotiate on some of them.
  • Look for ways to reduce chargebacks to avoid extra fees.
  • Budget for fees so that they’re not a surprise on your balance sheet.

If you’re looking for a way to accept credit cards without paying higher fees, contact us at Velocity Merchant Services for a free consultation. Our team has more than 20 years of experience, and we’re very transparent in our fee structure. We can explain the exact fee breakdown you’ll pay and help you find solutions designed to save you money.

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