Credit card processing rates
Paying with credit or debit cards is, no doubt, more convenient than paying with cash. If you run an ecommerce business, card payments are about the only means your customers can pay for your products or services. Depending on the industry, card payments may account for up to 65% of sales or more. Unfortunately, accepting card payments come with the extra burden of processing fees. Depending on the volume of transactions, these fees could significantly increase your overhead and make it more difficult to give your customers the best prices.
The good news is that credit card processing rates differ from processor to processor. While we will not advise switching your merchant account provider to anyone that promises the lowest rate, your business can certainly save more if you are shrewd about how you handle credit card processing fees.
Who determines card processing fees?
First, we need to highlight the three different kinds of credit card processing rates/ fees:
- Interchange fees: A non-negotiable fee set by card issuers.
- Assessment fees: Another non-negotiable cost determined by the card brand
- Processor's markup: A negotiable cost set by your merchant account provider.
As you may already have deduced, card brands such as MasterCard or Visa have full control over interchange fees and assessment fees. They typically publish these rates on their website, and all processors pay the same amount. On the other hand, the processor's markup is determined by your merchant account provider. Thus, the amount you'll pay will depend on the deal you strike with them.
What are the factors influencing credit card processing rates?
Many of the top firms in the payment processing industry post their credit card processing rates on their website, and they offer all their merchants the same rates. However, they typically limit the scope of businesses they worth it. Merchant account providers that provide custom rates are more flexible with their approval process. Below are a few factors that determine how much they'll charge:
- Volume of sales and average ticket: The more payments you process, the lower your processing fees. Also, the higher the average size of your order, the lower your fees. If you overestimate these parameters while negotiating, your merchant account provider may penalize you.
- Nature of business: Some industries are considered high risk while some others are classed low risk. For example, if you operate in the cannabis industry, you can expect to pay higher credit card processing fees.
- Manner of payment: Credit card payments made in brick and mortar stores pose a lower risk of fraud than online transactions. Thus, the processing rate will be lower.
- Type of card: Credit cards are categorized into different tiers, including standard, no-frills, reward, corporate, etc. Each of these tiers may have different processing fees.
Partner with Merchant Focus to enjoy the best card processing rates
If you've been searching for the best merchant services provider for your business, you need not look beyond Merchant Focus. We are a preferred Authorize.Net reseller, and alongside our partners, we guarantee safe, secure, and affordable online payment processing. Contact us on 800-895-4085 or visit our website to learn more.