Having the ability to accept credit and debit cards as payment for products and services is essential for online as well as brick and mortar businesses today.
Since many people don’t carry cash in their wallet, they won’t shop at a business that can’t or won’t take their credit card.
Which is where low credit card processing fees come into play. In order for a business to accept plastic, they need a merchant account. Before entering into a contract with a bank or credit card processor, it’s important to understand credit card processing fees.
Merchants must take these fees into account when pricing their products and services because there’s no way to get around them.
While all processors have fees, some of them are much more than others.
Understanding the types of fees can help a business owner compare the rates among different companies so they won’t pay too much and have to pass those charges on to their valued customers.
The First Distinction a Business Owner Must Know: The Difference Between Wholesale And Markup
The wholesale fees are what the credit card association charges for their services.
These fees do not change.
The processors pass them on to customers and generally charge a markup on top of those fees.
The percentage of markup and the transaction fees are the charges that can be compared to choose the best company.
It’s Essential To Ask Companies: What Are The Credit Card Processing Fees?
Each company has there own fees, which will decrease the profit a merchant makes on each transaction. Finding the company with the best fee structure may take some time but it is definitely worth the effort.
Tiered pricing models are generally the most difficult for merchants to decipher and usually result in higher fees per transaction.
Because of their complexity, it is more challenging for a merchant to determine whether they were charged too much in error so they may get away with charging excessive credit card processing fees.
Overall, an interchange plus pricing structure, with low transaction fees is the best choice for any merchant who is able to get this type of contract.
When it isn’t possible, merchants should insist on transparent pricing to ensure they are able to make a profit on each sale.