UnderstandingCreditCardProcessingFees
Introduction:
Ifyouareabusinessownerthatacceptscreditcards,itisimperativetounderstandthefeesassociatedwithcreditcardprocessing.Thesefeesareoftenmisunderstoodandcanhaveasignificantimpactonyourbottomline.Thisarticlewillprovideabreakdownofthevarioustypesoffeeschargedbycreditcardprocessors.
InterchangeFees:
Themostsignificantfeeassociatedwithcreditcardprocessingisinterchangefees.Thesearefeesthatarechargedbythecard-issuingbanksandarepaidbythemerchant.Interchangefeestypicallymakeupthemajorityoftheprocessingfeeschargedbycreditcardprocessors.Thesefeesaredeterminedbythetypeofcardbeingused,suchasarewardscardoradebitcard.
AssessmentFees:
Assessmentfeesareanotherfeethatischargedbythecard-issuingbanksandpaidbythemerchant.Thesefeesaretypicallychargedasapercentageofthetransactionamount.Assessmentfeesareusedtocovertheadministrativecostsassociatedwithprocessingcreditcardtransactions.
ProcessorFees:
Thefinaltypeoffeeassociatedwithcreditcardprocessingisprocessorfees.Thesefeesarechargedbythepaymentprocessorandcoverthecostsassociatedwithprocessingtransactions.Processorfeescanvarysignificantlydependingontheprocessingcompanyusedandthetypeoftransactionsbeingprocessed.Somecommontypesofprocessorfeesincludemonthlyfees,per-transactionfees,andgatewayfees.
Conclusion:
Whenacceptingcreditcards,itisimportanttounderstandthevariousfeesassociatedwithcreditcardprocessing.Interchangefees,assessmentfees,andprocessorfeescanallhaveanimpactonyourbusiness'sbottomline.Byunderstandingthesefeesandworkingtominimizethem,youcanmaximizeyourprofitsandensurethatyourbusinessremainssuccessful.
