Credit Card Processing Fees For Businesses

Credit Card Processing Fees For Businesses – Keeping track of all the moving parts associated with credit card processing can be challenging. There are so many different parties involved in any transaction, and everyone has to be paid.

For those of you who want to learn more about wire transfer fees and where they come from, you’ve come to the right place. I will explain below everything you need to know about this topic.

Credit Card Processing Fees For Businesses

Let’s start with the basics. Before we get into the fees related to the acquiring bank, it is important to define exactly what the acquiring bank is.

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The acquiring bank is your bank. This is usually referred to as a “vendor” or “merchant bank”. Acquiring banks process credit and debit card transactions on behalf of the merchant.

The purchasing banks are authorized members of credit card networks, such as Visa and Mastercard. The buyer helps confirm the sale when a merchant processes a credit or debit card transaction based on cardholder information.

Cardholder data is provided at the time of sale by the card network and the issuing bank (the bank that issued the card to the consumer).

You can see that the acquiring bank is just one of many different players involved in credit card processing.

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Let’s say a customer pays for your goods or services with MasterCard. The cardholder’s issuing bank makes the card data available to the buyer.

After the purchasing bank checks that everything is in order and the funds are sufficient, it approves the purchase and deposits the sale amount into your account.

In some cases, payment processors can double as acquiring banks. They may have direct contracts with companies to provide merchant services to process payments. However, not every payment processor is an acquiring bank.

To better understand where bank fees come from, you need to recognize the role that an acquirer plays in processing payments.

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Banks can approve credit cards and debit cards. They also connect with issuing banks on behalf of the merchant. So, whether you’re processing a debit card transaction or credit card payments, you need a merchant.

In short, the acquiring bank can be seen as an intermediary between the cardholder’s financial institution and the merchant. It is the buyer’s job to make sure that the funds are transferred.

The acquiring bank takes a certain financial risk for its role in this process, which is where the purchase of the bank’s fees come into play.

Let’s look at a simple five-step process to give you a better understanding of what the acquiring bank does for each credit card transaction:

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Again, the terms “acquiring bank” and “payment processor” cannot always be used interchangeably. While some acquirers are also payment processors, this is not always the case.

Why do the acquiring banks charge fees? As you saw in the previous sections, the acquiring bank plays an important role in the transaction. Without the acquiring bank, merchants will not be able to get paid.

Also, it is important to understand that the acquiring bank deals with sensitive data of the cardholder. This means they must follow strict security standards and payment processing procedures.

With all this in mind, the acquiring bank charges the traders to cover risks and other investments during the process.

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When the issuing bank sends money to the receiving bank, card network fees have already been incurred. So the merchant ultimately pays for the exchange costs, plus the processor or receiving bank markup.

The payment service provider must also be compensated for its role. So each transaction fee really consists of exchange fees, appraisal fees and more.

But believe it or not, the fees and rates charged by the credit card processor and the acquiring bank can be negotiated. Most merchants don’t understand this and end up paying too much for credit card processing.

Each acquiring bank is different. Sometimes you will pay a fixed fee, but usually the fee depends on the type of transaction, the volume of the transaction and the card used.

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For example, you will pay a different rate for Visa cards compared to Amex cards. PIN debit transactions may not have the same assessment fee or network fee as an e-commerce credit transaction that goes through a payment gateway.

The best way to lower your bank fees is to consult with professionals who can negotiate this rate on your behalf. If you try to do it yourself, you probably won’t get the result you’re looking for.

Here at Merchant Cost Consulting, we can help lower your credit card processing costs. We will communicate on your behalf with your acquiring bank to negotiate lower rates.

Depending on your processing volume, this can save you tens of thousands of dollars a year. Contact us today for a risk-free inspection and evaluation.

Infographic: Credit Card Processing Fees

Keep coming back to our blog too. We are constantly updating this resource with information about bank fees, credit card fees, card networks and many other useful insights related to credit card processing.

Prior to founding Merchant Cost Consulting, Colin worked in the payments industry for 3 years and gained extensive knowledge of the ins and outs of the industry. During this time, Colin learned how deceptive the industry could be and wanted to do something about it. Before joining the payments industry in 2014, Colin played professional baseball for the Los Angeles Angels of Anaheim. Collin is from Waterford, CT and received a BA in Business from Virginia Tech, where he was a member of the varsity baseball team.

Merchant Cost Consulting is a cost reduction company that helps businesses lower merchant credit card processing fees without disrupting their daily operations.

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we follow strict guidelines to maintain editorial integrity.

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Credit card processing fees are hard to understand, but we don’t think they should be, so we set out to create the most digestible and visually appealing infographic on the subject. You are the judge. 😉

Amed has been working in the world of e-commerce and online marketing since 2002. He started as an eBay seller, then gradually graduated to building and marketing his own websites and consulting others to do the same. He founded Merchant Maverick out of frustration with all the misinformation and shady tactics he encountered when trying to find a merchant account for his and his client’s businesses. He is the man behind most of the reviews of trading accounts and articles published about them. Have questions related to credit card processing? talk to him.

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Accepting credit cards is critical to the success of your business. But it comes at a price – one that can get you in over your head if you’re not careful.

How much are credit card processing fees? The average credit card processing fee is 1.5% – 2.9% for an in-person swipe transaction and 3.5% for an online transaction (due to a higher risk of fraud).

It goes without saying that the ability to accept cards is important to any small business. Unfortunately, processing fees are a necessary cost of doing business these days.

Read on to learn what business owners need to know about credit card processing fees, including some smart tips for reducing them.

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The average credit card processing fee ranges from 1.5% – 3.5%. Below is a breakdown for the 4 major credit card networks:

The rates above represent the common range between the networks. Your specific processing rates will vary depending on how you take cards, whether it’s a credit or debit card and more.

Average credit card processing

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