When you process a credit card payment, you’re paying for several things. Here’s the breakdown:
- Interchange Fees: These are the fees that go to the bank that issued your customer’s card. They vary depending on the card type (credit, debit, rewards, etc.) and the way the transaction is processed (in-person, online, keyed-in).
- Assessment Fees: These go to the card networks—Visa, Mastercard, Discover, and American Express.
- Processor’s Markup: This is what your payment processor charges to handle the transaction. This is the fee you have the most control over.
So, What’s the Magic Number?
There’s no one-size-fits-all answer here, but a general rule of thumb is that your total processing fees (including all the stuff above) should be between 1.5% and 3.5% of each transaction. If you’re paying much more than that, it’s time to evaluate your options!
Here’s a little cheat sheet:
- 1.5% – 2.5% for in-person, chip-card transactions (the safest and usually cheapest type of transaction).
- 2.5% – 3.5% for online transactions (riskier, so they cost more).
- 3.5% and up for keyed-in transactions (manually entering card numbers = higher risk).
Hidden Fees: Sneaky Costs to Watch Out For
Now, not all fees are in plain sight. Some processors sneak in extra charges like:
- Monthly fees
- Statement fees
- PCI compliance fees
- Batch fees
- Early termination fees
You don’t want to be caught off guard by these! Always check your contract for any mysterious fees that might be lurking in the fine print.
The Payment Processor Matters
Now, here’s where things get fun. Not all payment processors are created equal! Some might lure you in with low rates, only to tack on extra fees later. Others might offer flat rates, which simplify things but might not always be the cheapest option.
How to Choose a Processor
When choosing a processor, look for:
- Transparent Pricing: No hidden fees or surprise charges.
- Customer Support: You’ll want a processor that’s easy to reach if something goes wrong.
- Flexible Solutions: Whether you’re in retail, e-commerce, or mobile, the right processor will have solutions that fit your business.
The best payment processor will help you find the right balance between costs and convenience, not just push you into the priciest option. Plus, a good one will grow with your business!
Time for a Processor Check-Up!
If you’re already processing credit cards, take a few minutes to check your fees. Are you paying more than 3.5%? Are there weird fees you don’t understand? If the answer is “yes,” it might be time for a change!
Conclusion: Know Your Worth!
The bottom line is: you shouldn’t be paying an arm and a leg for credit card processing. Between 1.5% and 3.5% per transaction is a healthy range, depending on how you’re processing payments. Anything beyond that, and it’s time to negotiate or shop around.
And hey, if you’re feeling overwhelmed or think you might be overpaying, reach out to a processor you trust (like, say, Flat Creek Payments 😉). We’ll help you find the right plan and fees that make sense for your business!
For additional questions feel free to email us at info@flatcreekpayments.com. Even if you’re not processing with us we’re happy to help!
Flat Creek Payments 