Table of ContentsSquare GuideTable of ContentsIntroDeep DiveFAQ About Our Pricing:Square GuideCredit Card Processing Fees & Rates ExplainedSay No to Plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get an Original EssayIn this guide, we explain what credit card processing fees are, what they entail, how the fees affect your rate and how you can reduce your transaction fees.Table of ContentsWho decides credit card processing fees?What goes into credit card processing fees?Three types of credit card fees that affect your rateProcessing American Express and other non-bank cardsCan you lower your transaction fees?Credit cards with the lowest processing feesFAQs about Square's competitive flat feesIntroCredit card processing fees, also called rates Qualified discount rates, or simply "discount rates," are the processing fees a merchant pays for each credit or debit card sale. These fees are predetermined by your merchant services provider and generally involve three elements: interchange fees, appraisal fees, and payment processor markup. the issuer and the payment processor. The card issuer is the bank or financial institution that provides a "card association" for debit and credit cards and issues them directly to consumers. Visa, Mastercard, American Express, Chase, Capital One, and Discover are examples of card issuers (although Visa and Mastercard make up the lion's share of the market). The card issuer may also partner with banks or brands on credit and debit cards such as the Wells Fargo-Visa, Citibank Mastercard, or United Airlines Mileage Plus. For each card transaction, the card issuer charges the merchant a fee for the ability to accept the card – typically, a percentage of the transaction amount plus a flat fee. The payment processor is the financial institution that works behind the scenes to securely process and finalize a credit or debit card transaction. To facilitate all of this, payment processors typically have partnerships with other companies or brands that work directly with consumers and merchants. Like card issuers, payment processors typically charge a percentage of the transaction amount plus a flat fee for each credit or debit card purchase. Ultimately, the average payment processing cost for U.S. businesses making between $10,000 and $250,000 per year. payment volume is between 2.87% and 4.35% per transaction. Many factors determine how much you might ultimately pay, including PCI compliance fees, annual account fees, and chargeback fees (which we'll cover below). In fact, for U.S. businesses making between $10,000 and $250,000 in sales per year, additional fees average 28 to 60 percent higher than the initial rate quoted (not to mention the cost of equipment rentals and software subscriptions). It is therefore important to do your homework before deciding how you will handle card payments in your business. Square offers competitive and transparent pricing so you know exactly how much you're paying to process credit and debit cards. That's just 2.75% per swipe, dip or tap, 3.5% + 15 cents for each transaction entered and 2.9% + 30 cents for eachonline transaction. There are no monthly or hidden fees, and PCI compliance and chargeback protection are included in the price. Another benefit of using Square is that we charge the same rate for all major credit cards, including American Express. This way, you can accept any payment method preferred by your customers. With other POS solutions, credit card processing fees may vary from card to card. three types of credit card fees that affect your rate: Interchange According to a recent analysis by ValuePenguin, the overwhelming majority (78%) of credit card processing fees come from interchange fees – money paid from the bank acquirer (merchant account) to the issuing bank (customer account) every time you call someone. Interchange fees are therefore in place. banks can cover fraud, processing fees and sale approval risk. The banks involved in the transaction set the interchange rate. Although Mastercard and Visa make their interchange rates publicly available, Discover does not currently do so. Interchange fees change twice a year, in April and October. Banks consider a number of factors when setting the interchange rate for a company's card processing fees. These include: The type of card used PIN debit cards are lower risk than credit cards, so they generally have a lower interchange rate. Rewards cards (travel, triple points, etc.) and business cards have some of the highest interchange rates. Transaction Risk In-person point-of-sale (POS) transactions are much less risky than card-not-present (CNP) transactions. ) transactions (online, by telephone or by mail). Indeed, a point-of-sale transaction requires the scanning of a chip, and often a PIN or signature, to securely complete the sale. As a result, POS transactions have a lower interchange rate than CNP transactions. The amount charged Merchants with small ticket sizes and large sales volume can benefit from lower interchange rates to help them reduce costs. The type of business Each business that accepts credit cards Payments has a merchant category code (or MCC), a four-digit number assigned to them by the acquiring bank or institution. The MCC is used to classify businesses into market segments that simplify IRS reporting. The MCC also influences the amount a bank or institution charges in interchange fees. Types of businesses considered “higher risk” (such as financial services, travel, gaming, and hospitality) often have to pay higher interchange fees. Payment Processor FeesThe payment processing fee is what you pay to the credit card processor for using the product. Typically, these fees are charged per transaction. Square's pricing is just 2.75% per swipe, dip or tap, 3.5% + 15 cents for each transaction entered, and 2.9% + 30 cents for each invoice or e-commerce transaction. There are no monthly or hidden fees since our flat-rate payment processing fee includes any fees incurred through interchange, as well as any additional assessments and assessments or other fees related to processing American Express cards. Dues and Dues Payment processors must collect so-called dues and dues for Visa, Mastercard and Associations.Discover Card. . These are fees paid directly to card associations for the use of their card brand, as well as the ability to process transactions on their payment networks. Evaluation fees are different from interchange fees in that they are charged based on total monthly sales. as opposed to every transaction. They are also much lower than interchange fees: they represent only four percent of overall credit card processing fees. The amount you pay in appraisal fees depends on various factors. Some card associations charge more for credit cards than debit cards, while others charge more when the transaction amount is higher. If a transaction is unique (for example, an overseas transaction), this could also result in higher fees. Like interchange fees, credit card associations review their assessment fees twice a year. So be sure to check your monthly credit card statement for any increases or decreases in your appraisal fees. Below are the most recent assessment fees (at the time of writing) for Mastercard, Discover, and Visa. It's Square's fee payment gateway The channel that transmits money between your merchant account and your payment processor Free PCI Compliance The security standard that all businesses that accept credit cards must adhere to Free Chargeback Fees incurred when a customer issues a chargeback for a payment Free POS software (monthly SaaS fee) The amount you pay monthly to use your POS software Free POS hardware rental The monthly costs to rent your point-of-sale terminal hardware and other accessories associated with your POS hardwareN/A Batch FeeFee for settling/closing your deposits each day (also known as Batch Header Fee)Free Hosting FeeFees charged for POS systems traditional server-basedN/A Wireless access feesA fee that may be charged for using a cloud-based POS terminal versus a traditional phone lineFree AVSAddress verification system is intended for transactions entered and matches a customer's billing information to the card on file, incurred per transactionFree monthly statement/support/service fees Some payment processors charge a flat monthly fee for support-related services, including preparation and sending your monthly statement, plus general customer support Free Minimum monthly fee The fee between your monthly GPV (credit card dollars processed) and the agreed-upon monthly minimumFree processing American Express and other non-bank cardsAmerican ExpressAmerican Express does not participate in exchange system - only Visa, Mastercard and Discover do this. Indeed, American Express (as well as Diners, Discover and JCB) is considered a non-bank card. American Express has its own network in a "closed loop" payment model: it is both the network and the payment processor or bank. This means that American Express owns all the profits and bears the credit risk associated with the transaction. This is why American Express cards are more expensive to process, especially when it comes to returns. Rewards and Travel Cards Rewards and travel cards are generally more expensive to process than regular credit or debit cards. This is because they may incur what is known as an “intermediate surcharge”, which is significantly higher than the allowable rate, resulting in..