Continue to Site

CC processing fees

Steve not sure why you say “The “Interchange” part, does not depend on any business type or volume!” when interchange rate cards show many different rates for different classes of businesses and for some multiple tiers based on processing volume…
 
Last edited:
I don’t see how 2.1% could be true either.

We pay interchange +2.5 cents and are to 3% on average.
Click to expand...
If you’re around 3% average, then you must being charged an additional percentage per dollar amount, called “Discount Rate” or “Basis Points”.
Usually is something that says what amount you processed per card and multiply that by a percentage rate, I.e 0.25% (That’s 25 basis points).
That would be listed on every card type (Visa, MC, DS, Amex) and would also be listed for both, credit and debit transactions.
Then you could have various other fees + monthly fees that add up to the total.
For example, if you have 5 cents per batch closure and 5 cents per settlement, that means 10 cents every time you close the batch.
If you have 5 cents “AVS” fee, then it charges you every time a zip code is entered. Some POS systems add that fee even if you don’t add the zip code!
If you haven’t completed the PCI questionnaire and passed, or it expired, or the scan failed, then you’re being charged probably around $20/mo as penalty for non-compliance.
Might be other charges in your statement which I can’t tell. Your best bet if you want to get something better, is to ask your rep to explain all of the fees charged line by line, and ask him to get you a better deal if he wants to keep you as a customer.

As far as the 2.1% mentioned above, I don’t know if its true or not. It does sound too good to be true, tbh. However, there are processing companies that offer locked rates with a membership fee. For example, they could be offering a 2.1% rate with a $95 monthly membership fee. That way they’re a little over the interchange cost plus they get the membership fee!
Now if you add the membership fee to the total it won’t be 2.1%!
Just a thought…

Hope this helps!
 
Last edited:
royster13 said:
Steve not sure why you say “The “Interchange” part, does not depend on any business type or volume!” when interchange rate cards show many different rates for different classes of businesses and for some multiple tiers based on processing volume…
Click to expand...
The reason I’m saying this is because that’s one of the things that I do for a living.
Interchange basically translates to cost price. As I said in my previous post, Interchange is set and updated by the card associations on an annual basis. You can either find it posted online on each card’s website, or you can contact them and request a copy of the interchange rates. Each brand has their own.

Interchange pricing and Tiered pricing are 2 completely different pricing schedules.
There are no tiers within an interchange plus pricing offered by the processors. (Volume tiers that might be included in the interchange only, are again, set by the associations.)
When I said that is does not depend on business type, I might have chose the wrong words. What I wanted to say to be accurate, is that the processing company that you sign up with, does not control your interchange rate, as it is already set by the credit card associations.
Business types or SIC codes are categories that your business belongs to. For example, all pizza shops, restaurants, fast food, etc. belong to 5812 SIC code known as “Eating Places, Restaurants” category.
You can see VISA’s interchange rates here for example:
https://usa.visa.com/dam/VCOM/globa...interchange-reimbursement-fees-2017-april.pdf

The processing companies control the plus which is their profit. That’s the only part where you have room for negotiation on a better deal.
As for tiered pricing, if you get an offer that includes the word “Tiered” run like hell!

I hope this helps to understand a little better how it works. If you have any other questions, please ask! I’ll be glad to answer or help in any way I can 🙂
 
Last edited:
48.png

If you’re around 3% average, then you must being charged an additional percentage per dollar amount, called “Discount Rate” or “Basis Points”.
Usually is something that says what amount you processed per card and multiply that by a percentage rate, I.e 0.25% (That’s 25 basis points).
That would be listed on every card type (Visa, MC, DS, Amex) and would also be listed for both, credit and debit transactions.
Then you could have various other fees + monthly fees that add up to the total.
For example, if you have 5 cents per batch closure and 5 cents per settlement, that means 10 cents every time you close the batch.
If you have 5 cents “AVS” fee, then it charges you every time a zip code is entered. Some POS systems add that fee even if you don’t add the zip code!
If you haven’t completed the PCI questionnaire and passed, or it expired, or the scan failed, then you’re being charged probably around $20/mo as penalty for non-compliance.
Might be other charges in your statement which I can’t tell. Your best bet if you want to get something better, is to ask your rep to explain all of the fees charged line by line, and ask him to get you a better deal if he wants to keep you as a customer.

As far as the 2.1% mentioned above, I don’t know if its true or not. It does sound too good to be true, tbh. However, there are processing companies that offer locked rates with a membership fee. For example, they could be offering a 2.1% rate with a $95 monthly membership fee. That way they’re a little over the interchange cost plus they get the membership fee!
Now if you add the membership fee to the total it won’t be 2.1%!
Just a thought…

Hope this helps!
Click to expand...
I understand every detail about all of the charges. We are not being changed and additional percentage rate.

There are additional fees charged by the various brands that are not usually defined as interchange, but they are in practice interchange, pass through fees if you like. I don’t have a statement in front of me, but an example of that is VISA TIF fee, which is 10 cents for any transaction that you do not submit AVS for.

My 3% was just rounding. Any given month it could be between 2.5 and 2.8 percent. Lots of small tickets and a mix of 40+ different interchange fees for different card types.
 
Last edited:
Lots of small tickets and a mix of 40+ different interchange fees for different card types.
Click to expand...
Yup, that pretty much sums it up!
If you’re getting 2.5% plus some change from time to time, then you’re good. It could be better, but not by much. At least you know what you’re paying!
 
Last edited:
You must log in or register to reply here.
Back
Top