Credit Card Payment Processing Pricing

There are basically two primary fees on credit card payment processing:

1. Discount Rate

2. Per Transaction Fee

The Discount Rate is not really a discount at all, it is a percentage of you total monthly sales. For example, if you sell $10,000 products on Visa this month and your rate is 2%, then you would pay your merchant account provider $200 in fees.

A Credit Card Processor will base the Discount Fee on the following criteria: your company’s evaluated risk, average sales ticket, transaction type, and total sales volume.

Most credit card processors will have two rates for each company. One will be the “qualified discount rate” meaning for card present transactions and the other will be the “non-qualified discount rate” meaning for MO/TO Transactions (mail order/telephone order).

There are two rates because the credit card processor sees these two types of transactions as a different risk. Typically, ‘card-present’ discount rates will fall between 1.59-2.5% and ‘card-not-present’ discount rates will fall between 2.2-3%.

NOTE: Some merchant service providers will only state their ‘card present’ rate and not mention their ‘card not present’ rate, be sure to ask what all the rates are, including what their corporate card rates is and international card rate is.

The Per Transaction Fee is as it states a per transaction fee, which usually applies to any transaction, void, debit, refund, batch close, etc. not just a credit card transaction.

The Per Transaction Fee for ‘card present’ transactions is usually 10cents – 20cents and typically 20cents – 50cents for ‘card not present’ transactions.

Equipment & Point-of-Sale Terminals

Basic Dial-up & IP Terminals go for between $999 to $1500 depending on the services, warranties, and model of terminal. Wireless & Cellular Terminals go for between $1400 - $2000, again price varies depending on services, warranties, model of terminal, used or new, etc.

You may choose to lease a Point-of-sale terminal instead if you are short on up-front capital. You can secure monthly lease rates as low as $35/month with a usually a 10% buy-out option at the end of 48 months. Again lease prices can vary depending on the length of the lease (12, 14, 36, 48, or 60 months), as well, buy-out options vary too. Be sure to find out the total details before agreeing to non-cancelable lease.

Point-of-Sale Terminals are not required for ‘card not-present’ transactions. You can use software that will run on your PC for as little as $200 that will verify transactions. You can also use no software or hardware solutions with a solution like IVR or ARU that gives verification over the phone.

Are There More Merchant Account Costs?

- Application Fees (usually non-refundable)

- Annual Fees

- Programming Fees

- Internet Processing Fees

- Shipping & Handling Fees

- Statement Fees

- American Express Set-up Fees

- Customer Support Fees

- Added Value Fees

- Minimum Processing Fees

- Chargeback Fees

- Late Payment Fees

- Bounced Check Fees

- Maintenance Fees

- Gateway Fees

- Surcharging Fees

- Tipping Fees

- Reporting Fees

- Forced Post Fees

- Etc.

Sometimes these are what are known as ‘nickel & dime’ fees that jack up profits for these merchant service companies; however some of them are just standard fees that most companies charge for their services.

A good reference source is this article titled ‘The 17 Essential Questions That Every Canadian Business Owner Must Ask Before Choosing A Payment Processing Provider.’

Make sure you cross all your “T’s” and dot all your “I’s” and make sure you completely understand all of your charges with your merchant account services before making a decision.

It is also just as important to remember that shopping on price alone is not a good choice, saving a fraction of a percentage point of few or cents per transaction or a few hundred dollars up front is not worth the headaches you may end up with if you choose a merchant account service provider who can not provide the services you need to stay up and running.

A good Merchant Account Service Broker will be able to help you navigate through the rough waters of merchant provider fees.



Read Part 5: Negotiating Low Rates With Merchant Providers