You should be aware of fees from your payment processor (payment processing fees), card network (assessment fees), and card issuer when accepting credit cards (interchange fees). The Acquirer Processing Fee, Fixed Acquirer Network Fee, Kilobyte Access Fee, Network Access and Brand Usage Fee are additional required payments.
Who sets the costs for processing credit cards?
The payment processor, card network, and card issuer are the three main services that charge you when you accept credit card payments.
Transaction processor
The banking firm that completes the credit card transaction is the payments processor, such as Chase. Most businesses deal with a third-party organisation like Leaders Merchant Services that streamlines this procedure for a banking institution. You may get equipment from the top credit card processing companies for both in-person and online transactions. Point-of-sale (POS) systems and credit card terminals are examples of this equipment. Furthermore, you have access to payment software programmes including virtual terminals, contactless RFID payments (Apple Pay, Google Pay), mobile payments, e-commerce shopping carts, and payment gateways. Payment processors charge a set fee in addition to a percentage of each credit card or debit card transaction.
Network of cards
American Express, Discover, Mastercard, and Visa are among the card networks. They help the retailer and card issuer conduct credit and debit transactions. For credit cards and debit cards, card networks also collaborate with card issuers. The top four credit card networks’ average transaction charges are as follows:
1.58 per cent to 3.3% for American Express
Find: 1.53 to 2.53 per cent
Visa: 1.29 to 2.64 per cent
1.29% to 2.54% for Visa
Where credit and debit cards are accepted is also decided by card networks. Credit cards used to have a varied acceptance rate, but today’s main credit card networks all have rates that are very comparable and are accepted by more than 10 million U.S. businesses.
Any credit card or debit card benefits or incentives are also the responsibility of card networks.
Card company
The card company generates money by charging the business owner a set charge plus a percentage of each transaction (similar to payment processing providers). A card transaction’s approval or denial is also ultimately decided by card issuers.
Processing costs for credit cards
The typical transaction processing cost for credit cards is from 1.3% to 3.5%. The costs an organisation levies will vary depending on the merchant category code (MCC), the kind of credit card, and the payment firm you select (American Express, Discover, Mastercard, or Visa).
Average fees and costs for credit card processing in 2022
In April 2022, Visa and Mastercard increased their merchant credit card fees for the first time in two years. The two biggest payment networks’ decision to hike “swipe fees,” which was delayed by the epidemic, was slammed by shops. Businesses assert that raising interchange costs, which merchants pay on each credit or debit card transaction, might aggravate inflation and hurt consumers because merchants might decide to pass the expense of higher interchange fees along to customers. Both payment networks increased transaction costs for some transactions while lowering rates for others. Retailers claim that the cuts are minimal and do not make up for the processing charge rises.
Key conclusions
For retailers, interchange costs range from 1.15% + $0.05 to 3.15% + $0.10, and assessment fees of an extra 0.14% to 0.17% are also charged. Merchants must pay interchange fees, assessment fees, and processing costs in order to accept credit card payments. These fees are paid to the payment processor, the payment network, and the card’s issuing bank. Payment processing costs are the only credit card transaction fees that are adjustable. The average credit card merchant fees for American Express cards are the highest. Payment processors can charge customers using interchange-plus, flat rate, subscription, or tiered pricing structures.
What are the typical processing costs for credit cards for businesses?
For retailers, credit card processing costs range from 1.3% to 3.5% of each transaction. The specific sum is determined by the payment network (such as Visa, Mastercard, Discover, or American Express), the kind of credit card, and the merchant category code (MCC) of the enterprise. Be aware that debit cards have a distinct price structure and typically cost less for businesses to accept. For this reason, you could only see a convenience fee for a credit card purchase and not one made with a debit card.