The Merchant Processing Guide to Credit Card Merchant Services

collection of credit card

To accept credit card and debit card payments at your business, you need a merchant processing account from a merchant service provider. Your merchant account will have different rates, pricing structures, and fees that you will be charged. The amounts can and do vary based on a variety of factors, such as the volume of transactions processed, dollar amount, business type etc.

To get an idea of what you could end up paying, you need to understand the various credit card merchant services terms and conditions and terminology. You also need to understand that you will be charged a fee for each transaction that is processed on top of other fees and rates you pay your provider.

Interchange Rate

The interchange rate is a fee that is charged by the card issuer. This rate varies based on numerous factors, including:

  • The type of credit card or debit card.
  • How the transaction is completed—i.e., chip read, swiped, manually entered, online, etc.
  • The type of business you operate.
  • Whether the transaction is processed as credit or debit.

For example, a chip-read debit transaction will have a lower interchange rate fee compared to a manually entered credit transaction. In addition, nonprofits tend to have the interchange rates, whereas “high risk” businesses, such as adult online websites, have the highest interchange rates.

The interchange rate fee is a per-transaction fee. So, each transaction will have an associated fee. The amount of the interchange fee will vary depending on the factors previously mentioned.

Card Brand Rate

The card brand rate is another fee that is charged for each transaction you process. The fee will vary based on the card brand—i.e., Mastercard, AMEX, Discover, or Visa. The fee is a small percentage of the transaction amount plus a varying set fee amount of a few cents.

Payment Processing Rate

A third fee you will be charged is the payment processing fee. This fee is charged by the merchant service provider for processing your credit and debit transactions. The amount is normally a percentage of the transaction dollar amount.

Equipment Lease Fee

Some merchant services rent the necessary equipment needed to process credit and debit card transactions. If you choose to rent the equipment instead of purchasing it, you are charged a monthly lease fee.

Other Fees

Depending on the merchant service provider you choose, you can be charged a variety of other fees that can include:

customer do payment with contactless credit card

  • Administrative Fees
  • Monthly Minimum Fees
  • Statement Fees
  • PCI Fees
  • Non-PCI Compliance Fees
  • Quarterly Fees
  • Application Fee
  • Setup Fee
  • Contract Cancellation Fee
  • Early Termination Fee
  • Monthly Account Fee
  • International Processing Fees
  • Account Changes Fee
  • Chargeback/NSF Fees
  • Authorization Center Operator Fee

Merchant Processing Pricing Options

Most merchant service providers offer different merchant processing pricing plans. Each plan is geared toward the volume of transactions to best align with your business needs. Some of the more common pricing plans are:

Interchange Plus Plans

Under this plan, you are charged a set rate by the service provider for their payment processing rate. The card brand rate and interchange rate will vary depending on the card used, transaction types, etc. However, you will always know how much your service provider fees are for each transaction.

Tiered Plans

A tired plan provides a lower rate for certain types of transactions and different rates for other types of transactions. This plan is beneficial for businesses that have a large number of the qualified lower rate transactions.

Flat Rate Plans

A flat rate plan combines all associated fees into a flat rate amount per transaction. This can be beneficial for businesses that have a large volume of credit and debit transactions. However, since the interchange rates vary, you could end up paying more on certain types of transactions than if you had an interchange plus plan, especially if you do not process that many credit and debit card transactions.

Putting It All Together

In the end, to determine your merchant processing fees, you need to read through the terms and conditions and proposed contract provided by the merchant service provider before signing the agreement and starting your service. If anything looks questionable or the amount is not clear, ask questions.

Furthermore, pay attention to the “fine print” regarding the contract period, automatic contract renewal, and contract cancellation for any hidden fees. By doing these things, you will have a general idea of how much per transaction you will be charged.

For further help in setting up your merchant processing account or, if you are looking for a better payment processor, please feel free to contact Adept Payments at 888-732-3838 today! Let us customize a plan that best suits your needs and objectives.

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