An Overview of Credit Card Processing Company Fees and Costs
If your small business intends to take credit and debit cards –by phone, online or in person — you’ll have to find a credit card processing company that will accept them. There are plenty of things to consider as you pick one, like fees and costs.
According to the U.S. Small Business Administration, the maximum credit card processing fee is 5% on every credit or debit card sale you make. Nonetheless, some companies could charge much less than the rest while giving the same products and level of service.
Below are some of the key credit card processing fees to be aware of:
These are fees charged for each transaction you process, and it’s covered by the payment processor, which pays to the card-issuing bank. Your per-transaction rate depends on a number of factors, including the type of transaction (personal, via phone or online) and type of card (credit, debit or rewards), as well as the size of every transaction (bigger and less transactions lead to lower fees). Personal transactions cost less in interchange fees, with the card being physically present, thereby reducing the risk of fraud.
Monthly Statement Fees
The credit card processing company could charge you monthly statement fees to pay the cost of mailing you a statement. The cost is about $10 a month.
Application and Setup Fees
Application for the processing service may require a fee, as well as setting up the equipment necessary to accept credit cards. The rate can vary significantly, depending on the company.
Monthly Minimum Fee
This is the minimum amount in fees to be collected by the processing company in any month. If you don’t reach or exceed this minimum amount, the processing company will charge you to make up the difference so you can meet the minimum. For instance, if the company’s monthly minimum fee is $25 and your credit card transaction fees for a month only total $20, the company will charge an additional $5.
Monthly Gateway Access Fee
This monthly fee may be charged by some processors for providing a payment gateway, which is in charge of transmitting transaction data coming from your processing system to the credit card companies. Monthly fees cost about $10 – $30.
Early Termination Fee
If you cancel your contract earlier than intended, the processor may charge you this fee.
Don’t be overwhelmed by all these fees as eventually, you will realize that they are all part of the advantage of using a credit card company. It’s called investment. What’s important is that you know all these fees and terms, and never hesitate to ask the company when you have concerns or questions. If they can’t give you a decent answer or resolution, then look for another company.
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