Common Credit Card Processing Costs

Normal credit card processing fees range from 2% – 2 . 5% for retail businesses that swipe the majority of their credit cards, to 2 . 25% to 3. 50% or more regarding e-commerce and mail-order businesses.

There are several variables that can dramatically impact a business’s average processing costs, so these types of general numbers should be used with a grain of sodium. If you’re interested in calculating a more accurate cost average for the business, consider the following variables in your calculation.

How are usually cards processed?

Businesses usually process credit cards as card-present or card-not-present. As the names imply, card-present refers to the act of physically swiping a customer’s credit card via an electronic reader, and card-not-present refers to the act of processing a card if it is not physically present.

Card-present businesses are perceived as lower risk, so they pay lower Visa and MasterCard interchange fees. They also have lower equipment costs since third-party software or gateways aren’t necessary to route transactions over the internet.

As you can see from the previously linked interchange schedules, the average base cost for a card-present business is generally 1 . 60% – 1 . 90% depending on the mix of debit cards versus charge cards, and standard credit cards versus reward cards.

Card-not-present organizations have higher costs because their method of processing cards carries greater risk. Accordingly, they pay higher interchange fees, and also have additional costs associated with third-party software and gateway providers.

Typical interchange fees and gateway costs range into the 2 . 25% – 3. 00% range for card-not-present businesses.

How much will your business process?

Your business’s gross credit and debit card sales have a direct impact on average processing expense. Monthly and annual fees have an especially large affect on average costs when monthly processing volume is low.

For example , a flat monthly fee of only $10 accounts for a solid 1% of gross sales for a business that processes $1, 000 a month. When other processing charges from interchange and the processor’s markup are added, the total percentage will likely be 4% – 5%.

Similarly, a company with the same flat monthly fee of $10 that processes $10, 000 per month only dedicates 0. 10% of sales toward paying the fee.

How much is your business’s average sale?

Your business’s average sale amount has a huge impact on bank card processing fees. Reason being is that smaller average sale sizes result in a greater number of transaction fees. Conversely, larger average sale amounts result in much lower transaction fees.

In the case of card-not-present businesses that pay transaction fees through interchange, to processors also to gateway providers, the impact on cost is significant.

Small average tickets for card-present businesses will have less of an impact, but still enough to be always a considerable factor in average cost.

A typical all-in transaction fee is $0. 20 – $0. 30 for card-not-present businesses, and about $0. 15 – $0. 20 for card-present businesses.

Multiply the number of average monthly transactions for your business by the above mentioned typical transaction fee to look for the impact of overall cost.

How much will the processor get?

Credit card processors use two general types of pricing schemes called bundled and interchange pass through. The latter of the two, interchange move across, is generally regarded as less expensive and much more transparent than bundled pricing.

If you’re currently using, or begin using a processor that utilizes tiered pricing, you will generally pay a greater markup, and will therefore have higher overall credit card processing expenses.

Luckily, it’s pretty easy to tell the difference between bundled and tiered pricing.
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A bundled pricing scheme will have a qualified, mid-qualified and non-qualified rate along with a flat transaction fee. An interchange pass through pricing scheme could have a single, low rate such as 0. 30% along with a flat transaction fee.


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