Credit Card fees; What are they?
Having visibility into credit card fess is an important part of maintaining bottom line profit. Most times the rate you will have to pay to process a credit card transaction is combination of the basic cost and the markup cost which is called the merchant discount.
Consider the merchant discount as the retail price of credit card processing, the basic costs as raw material expenses and the markup as production costs.
Base costs should account for most of the expenditure (around 75% – 80%) followed by the increase (around 20% – 25%). That said,
Basic credit card processing fee
Basic credit card processing fees consist of exchanges and valuations, and are the same for all processors. There are no credit card processor company that can give a rate lower than the basic cost. An example is First Data which is the biggest credit card processor, but they pay the same interchange and assessments fees as a small local bank.
InterExchange
The Interexchange represents the largest part of the credit card processing fee and is paid to the card issuing banks. Believe it or not, your processor and card brands (Visa, MasterCard and Discover) do not see any revenue from the exchange.
All Stakeholders from credit card Company’s like Visa, MasterCard and Discover do meet to decide how much they want to pay when you accept their credit cards.
Banks consider things like the method of processing (swiped, keyed, e-commerce), the type of card (rewards, business, consumer), your type of business (merchant category code) and a host of other variables. Interchange fees.
Interchange fees are measured net of refunds and debit, and most are comprised of a percentage and transaction fees. For example the current visa interchange fee that is charge for a swiped consumer credit card is 1.51% plus $ 0.10.
It is important to note that even if interchange rates do not vary between processors, it is possible to optimize interchange fees to reduce costs. See our information on interchange fees for more details on trade optimization.
Rates
Visa, MasterCard and Discover earn money by charging assessments on every transaction involving one of their credit cards. Like the exchange, the ratings are exactly the same for all credit card processors and no processor can give you a lower rate or better agreement on the ratings.
Most times assessments, may be billed differently were you have a group pricing model. And this is mainly because your processor has more control over manipulating prices based on a bundling system.
Rate for each brand of card are listed below along with details on when they apply. Rates are periodically changed by card brands, and this list is updated as changes are announced.
Visa
Debit Assessment: Also Called Visa US Acquirer Service Charge – Debit This rating applies to all Visa debit transactions.
0.13%
Credit Rates: Which is also Called US Visa Acquirer Service Charge – This credit rates applies to all Visa credit transactions.
0.13%
Purchaser Processing Fee (APF):- Debit Also referred to as Visa Processing Fees – Variable Debit This charge applies to all non-PIN Visa debit authorizations acquired in the United States.
$ 0.0155
Master Card
Volume of the acquirer’s brand
This estimate applies to Master card transactions less than or equal to $ 1,000.
0.13%
Purchaser Brand Volume : Credit Transactions Over $ 1,000
This valuation applies to Master card credit sales transactions greater than $ 1,000.
0.14%
Discover
Evaluation Valuation applies to the gross volume of Discover card transactions. Note: In April 2016, the valuation of Discover went from 0.11% to 0.13%. Note: In April 2015, the valuation of Discover went from 0.105% to 0.11%.
0.13%
Data Usage Charges: Data Usage Charges apply to all US-based authorization transactions.
$ 0.0195
International Processing Fees: International Service Fees apply to transactions acquired in the United States and paid for with a card issued outside the United States.
55%
The above credit card summary will get you started on getting to know credit cards rates.
For more information on how to reduce your credit card fees, contact us at Answers@enterprisefundingsolutionstx.com
