Didyou know

Acquirers can charge a lot more than just the discount rate, including monthly maintenance fees, reprogramming fees, chargeback fees and many other charges. Merchants should take all of these costs into consideration and calculate their true cost of credit card processing.

The discount rate, monthly minimum, batching fees and several other types of fees and charges are defined and described here on this page.

A template for calculating the true costs of accepting credit cards is also provided, which factors in all the costs of credit card processing, not just the discount rate. Don't be fooled by a low rate, there are many other fees and charges that factor into the overall cost of taking credit card payments.

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Credit Card Payments:Paying too Much for Credit Card Processing?

The Fraud Practice works with merchants in all verticals around the world to negotiate and setup merchant accounts. We offer a free competitive analysis to any merchant looking to see if they can get a better deal on their merchant account. We know which acquirers and payment service providers support which verticals. We also know where you can get the best possible pricing terms. Through our relationships with over 14 acquirers we will competitively shop your deal discreetly. We typically can save merchants 20% to 60% on their existing rates.


Negotiate, negotiate, negotiate...

Don't be fooled by a really low rate, there is more to your "total cost" for credit card processing than just the rate. Dig under the covers, and negotiate on all the fees.

Credit Card Processing is a very competitive market, don't be afraid to ask for lower fees and rates.

Some acquirers seem inexpensive when they offer low transactional rates, but they can compensate this with monthly maintenance fees, batching fees and many other additional charges. Calculate your true cost of credit card processing which can include any of the following fees and charges.

The Discount Rate: The discount, or lead, rate is a percentage of the sale that the processing company subtracts from the total sale. It typically ranges from 1.5 percent to 4 percent. If you sell an item for $100 and your discount rate is 2 percent, the company subtracts $2 from the price, leaving you $98.

The per-transaction fee: This is an additional set fee applied to each transaction. Almost all processing companies charge this fee, which can be as high as 50 cents.

The Batching fee: At the end of each day, you total your transactions and send them through the processor's network. Many services charge to process this "batch." The fee is typically 25 cents to 30 cents per batch. That's not a lot per day, but it adds up over the course of a month.

Monthly Maintenance fee: On top of these three fees, most companies impose a fixed monthly maintenance fee (also called a statement or account fee).

The Monthly Minimum: Often, companies require you to pay a certain minimal amount as a result of transactions each month or you will be charged an additional fee. They set this requirement to make sure the costs of servicing your account are covered. For example, based on a monthly minimum of $25.00. If you had $500 in credit-card transaction sales in a month and your discount rate is 2 percent, you paid $10 in discount rates. You also paid $3 in transaction fees, for a total of $13 in fees. That leaves your $12 short of the $25 minimum, so you'd be charged that amount at the month's end.

Additional charges for some cards: Most processing companies tack on additional charges for cards other than Visa and MasterCard. These are bank-based programs, while other cards operate independently. This extra charge ranges from 10 cents to 25 cents.

Debit Card Fees: Likewise, processing companies typically charge a fee to process debit-card transaction. This ranges from 25 cents to $1.50.

Reprogramming Fees: Even if you already have credit-card processing equipment, some services may charge a "reprogramming fee" to start up new service.

Charge-back fees: If a customer disputes a transaction, the credit-card processing company levies a charge-back fee to the merchant, which is essentially an administrative charge. This fee can range from $10 to $25.

Calculate your true costs:

1. Monthly Visa/MasterCard Sales in dollars =$_________
2. Discount rate =____%
3. Total Cost for Rate = $_________
4. Number of monthly Transactions = _______
5. Cost per Transaction Charged=$______
6. Total Cost for Transaction=$____________
7. Additional Fees Monthly=$___________
8. Total Monthly Costs(3+6+7):=$__________
9. Actual Rate =8/1 = _____%

AdditionalResources

  • Introduction to eCommerce Credit Card Payments.

    Covers the credit card process flow defining each of the "payment players" and reviews payment concepts such as authorizations, settlements, reversals, chargebacks and the credit card association's high risk programs.

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    Will the U.S. ever adopt EMV, or are banks and businesses holding out for the next wave of payment technology?

  • Fundamentals for Selecting ecommerce payment options

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  • Introduction to Ecommerce Fraud Fundamentals.

    Provides participants foundation level knowledge about the theories, best practices and terminology surrounding electronic payment fraud. Presented in a standard format covering the history of eCommerce Fraud, consumer fraud, merchant fraud, fraudster motivation, fraud trends, identity verification and phishing.

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  • Credit Card Payments How important is it to take credit cards if you are doing business online; what can you expect from accepting credit cards online?
  • Understanding the Players In this section we will discuss each of the major players in terms of what their role is, which other players they associate with or represent and how they make money.
  • Credit Card Money Flow Learn how money is exchanged between the players within a credit card transaction.
  • Chargebacks and Fraud Liability
    In the card-not-present world the merchant is typically the one paying for the fraud. They already paid and lost the goods, all of the overhead costs they spent on the order, and they will still have to pay a charge-back fee.
  • Credit Card Payments 101 Get answers to common questions about deciding to take credit card payments online.
  • Are you overpaying for credit card processing? Don't be fooled by a really low rate, there is more to your "total cost" for credit card processing than just the rate. Dig under the covers, and negotiate on all the fees.

    The Fraud Practice