Did you know that businesses in the United States paid $42.3 billion in credit card processing fees in 2017? And that number is only expected to grow in the years to come.
If you're a business owner, it's important to understand how credit card processing fees work. After all, these fees can take a big bite out of your profits if you're not careful.
In this guide, we'll explain everything you need to know about credit card processing fees. We'll also give you some tips on how to save money on these fees.
So, let's get started!
What Are Credit Card Processing Fees?
Credit card processing fees are charges that businesses must pay in order to accept credit card payments. These fees can be charged by the credit card issuer, the credit card processor, or both.
These fees typically include:
· Interchange fees: These are charged by the credit card issuer and are based on a percentage of the transaction amount, plus a fixed fee.
· Assessment fees: These are charged by the credit card associations (Visa, Mastercard, etc.) and are also based on a percentage of the transaction amount, plus a fixed fee.
· Transaction fees: These are flat fees charged by the credit card processor for each transaction.
· Discount rates: These are fees charged by the credit card processor, typically as a percentage of the transaction amount.
· Monthly fees: These are flat fees charged by the credit card processor on a monthly basis.
·Fees for chargebacks: These are fees charged by the credit card processor when a customer disputes a charge and requests a refund.
How Much Do Credit Card Processing Fees Cost?
The cost of credit card processing fees can vary depending on a number of factors, including the type of business you have, the average transaction amount, and the credit card processor you use.
Generally speaking, businesses can expect to pay anywhere from 1.5% to 3.5% of each transaction in credit card processing fees.
For example, let's say you have a business that sells products online. Your average transaction amount is $100. If you're using a credit card processor that charges 2% per transaction, you would pay $2 in credit card processing fees for each transaction.
On a monthly basis, you can expect to pay around $25 to $30 in credit card processing fees, plus any additional charges for things like chargebacks or monthly account fees.
How to Save Money on Credit Card Processing Fees
There are a few things you can do to save money on credit card processing fees.
First, be sure to shop around for a credit card processor that offers competitive rates. There are a number of credit card processors out there, so you should have no problem finding one that fits your budget.
You can also save money by negotiating with your credit card processor. Many processors are willing to negotiate on rates and fees, so it's always worth asking.
Finally, consider using a credit card processing service that offers flat-rate pricing. With this type of pricing, you'll pay one low, fixed rate for all of your credit card transactions, regardless of the amount.
