In our digital society, accepting cash-only at your business may be becoming more of a detriment to your bottom line. In 2017, 78% of consumers, through a survey, said they prefer to pay for goods or services with credit or debit cards. In order to stay competitive, it’s almost a must that you accept several forms of payment. Let’s look into the basics of how credit card processing rates are configured and how you can determine which ones you will accept at your business.
Average Credit Card Processing Fees
You may ask, “What is the average cost for fees with credit card processing?” The answer isn’t that simple. The actual cost fluctuates based on how customers pay and what card types they choose to use. Visa, American Express, Mastercard, and Discover each have their own interchange reimbursement fees that they charge between acquiring and issuing banks for using their network.
For example, a Chase-issued Mastercard that’s issued to an individual carries different interchange fees than if it was issued to a business. Also, Visa and Mastercard make their fees available to the public, while Discover and American Express do not, which means they typically charge higher fees.
Standard Pricing Structures
Service providers are not all the same because of their services and how they price those services. However, there are 2 standard structures that you will find.
Tiered/Bundle Pricing – This is the most common and most popular structure among providers because they save the most money by taking that money from the merchant or you. Fees get bundled into general rate tiers in order from lowest to highest rates with their own qualifying rules for each category: Qualified, Mid-qualified, Non-qualified.
Interchange Plus/Pass Through Pricing – This is a much more transparent pricing structure. It works toward helping the small business owner by offering lower fees that are straight-forward flat interchange fees plus a transaction fee. That way you always know what you are paying.
Other Common Credit Card Processing Fees
Yes, there are typically other fees associated with credit card processing. Be sure to consider: monthly fees stemming from point-of-sale (POS), PCI compliance, etc.; annual fees that might be applied vs. monthly; cancelation fees if you terminate your contract before it comes to term; and incidental fees like chargebacks and retrieval fees.
Now that you understand the behind-the-scenes credit card processing you are ready to find the most competitive and lowest rates for your business. After researching those fees, consider upgrading your POS to Bepoz. Call us for a free point-of-sale demo today.