How Much Will It Cost Me To Accept Credit Cards?

To understand what will it cost me to accept credit cards, check the credit card processing providers fees. They must charge as dictated by the credit card brands and fees they charge for their services. Let’s start with the fixed charges.

Interchange and Assessment Fees

Interchange and assessment fees are set by the credit card brands (Mastercard, Visa, etc.) and the bank that issued the card. As the merchant, you do not pay these fees directly; they are included in the fee structure you negotiate with a credit card processing company.

Interchange fees vary depending on several factors. A credit card that offers rewards may have a higher interchange fee than a standard credit card. And credit cards have higher fees than a debit card. Rates also vary depending on what services or products the merchant sells, and whether the card was presented in person at the time of the sale or if the purchase was made on-line. But regardless of the kind of credit card used or the processing procedure, Interchange fees are listed on each credit card brands’ website and represent a set fee schedule paid by all merchants.

Processor Charges

When it comes to the question what will it cost me to accept credit cards, the answer is that all credit card processing companies perform the same basic service in the credit card processing transaction. Once your buyer swipes his credit card at your POS terminal, or you input the information, it passes through several processes before the money actually gets deposited into your account. The information is sent to your credit card payment processor and they submit the transaction to the bank that issued the buyer’s card. The issuing bank accepts — or declines — the transaction and returns an authorization code which is sent to your point-of-sale terminal from your credit card processing company. This and other transactions for the day are sent in a batch back to the credit card processing company, where they are distributed to the issuing banks for payment. The issuing banks send the money to your credit card processing company, who in turn transfers it to your assigned merchant bank account.

Though the services may be comparable, the charges are not. There are a number of ways a credit card processor may charge for its services:

  1. Monthly fee: flat fee each month added to the fixed fees.
  2. Discount rate: a percentage of each sale added to the fixed fees.
  3. Transaction fee: a flat fee for each sale added to the fixed fees.

On top of these fees, your provider may also add a number of other fees: a monthly service fee, a terminal rental fee, a fee for not meeting your monthly minimum, a contract termination fee, a minimum purchase amount fee, etc. These fees are all negotiable and you should be aware of how they can impact your processing cost.

How Can I Estimate What It Will Cost Me To Accept Credit Cards?

So maybe the questions you should ask yourself are what will it cost me to accept credit cards and if there is some way to estimate what your credit card costs might be.

Start by answering these questions:

  1. How will you be processing your credit card transactions? Do you own and operate a brick and mortar business or do you do all your business on-line? Will you be processing credit cards at a POS terminal or will you be manually inputting the information? Do you need to process credit card payments in the field? How you process your credit card transactions affects the fixed fees you pay as Interchange.
  2. What is your average ticket size? Do you have less sales with a higher ticket price versus a high sales volume low ticket? If you are processing a large volume of credit card sales, and you are paying your credit card processor a set amount per sale, this could have an impact on your processing costs.
  3. Are you a seasonal business? If so, you don’t want a contract that enforces a monthly minimum charge.
  4. Are you a high risk business?
  5. Are you a new business or an established business?

If you are prepared with answer to the question what will it cost me to accept credit cards and other questions about your business operations when you apply to a credit card processor, they will be able to give you a more accurate estimate of what each type of credit card transaction you process will cost.

When choosing a credit card provider, cost per transactions should be the primary factor in your decision. But the extra charges tacked on by providers add to the bottom line costs. There are a lot of variables that will affect your rate: some of these variables you can control and others you can’t. So when choosing a credit card provider, be sure to read their offer carefully and ask questions about all the fees that are listed.