No one enjoys paying additional payment processing fees, especially if those fees are avoidable. Searching through your merchant services bills and statements can be time-consuming, especially if your line items are filled with credit card processing jargon meant to keep you in the dark. Credit card processing fees are the fees that you, the business owner, pay to accept credit cards from your customers as a form of payment at your business. These fees consist of transaction fees, flat fees, and incidental fees. All together they contribute to the total charges your small business accrues when processing payments.
Some credit card payment processing companies charge extra fees for everything from PCI compliance to setting up your account. Average credit card processing fees range from 1.7% for swiped card payments up to 3.5% for keyed-in transactions. As you can see, credit card processing fees can be complex and difficult for business owners to understand. So how do you know when you’re paying too much for credit card processing? Here are a few ways you can identify and avoid extra credit card processing fees in 2021.
What Credit Card Processing Fees Am I Being Charged?
Read through your statement carefully to see what you’re actually being charged. You can’t cut costs if you don’t know what they are, so it’s important to find and address your credit card processing fees. For instance, the transaction fee is an additional per swipe fee that is charged on top of the interchange and percentage markup. These card processing fees can range from $0.08 to $0.30.
Transaction Fees – Transaction fees are made up of the interchange rate, the assessment fee, and the payment processing markup. These fees are charged per transaction.
Recurring Fees – These fees are typically charged monthly and depend on the payment services provider you currently use. It’s the cost you accrue for using their payment processing service. Most payment processing services providers make huge profits on the fact that the average small business owner is not aware of what they are paying and why. Keep an eye out for these credit card processing fees on your next statement and you could save hundreds of dollars on your next bill.
- Monthly Minimum Fee
- Statement Fee
- Batch Fee
- Next Day Funding Fee
- Annual Fee
- IRS Report Fee
One-Off Fees – One-Off fees are charged at the beginning, middle, and end starting with the set up of your merchant services account. After you pay a setup fee you’re then charged additional one-off fees for PCI compliance, address verification, and additional payment gateway fees. The one-off fees don’t end there. You’ll also be charged for chargeback and retrieval fees if your customer’s card payment is returned. The dreaded early termination fee is also included in the list of one-off fees your business could be charged.
Average Credit Card Processing Fees
These are the average credit card processing fees for the 4 major credit card providers in the United States.
- Visa : 1.43% – 2.4%
- Mastercard: 1.55% – 2.6%
- American Express: 2.5% – 3.5%
- Discover: 1.56% – 3.5%
Protect Your Devices
When choosing a processing service, the option to lease payment hardware so that you can accept credit card payments can be enticing. After all, you’re spreading the cost out over months instead of having one lump sum. However, leasing can cost more in the long-run compared to buying your terminals. Many processors charge extra device fees while you lease their credit card processing terminals. And, if you want to switch processors, you’ll have to start all over again.
Instead, we suggest that small business owners buy their payment terminals and opt into a protection plan. Not only will you own your hardware, but you’ll be able to easily get a new system in cases of wear and tear or accidents. This is a great option for small businesses with high foot traffic. If your terminal gets knocked to the ground, you’ll be able to get a new one for just a few dollars a month.
Stay PCI Compliant
PCI stands for Payment Card Industry. This means that the PCI Compliance security standards are set by the credit card companies themselves – not your individual payment provider. All businesses that handle cardholder information have to be PCI compliant. That means that if you store card payment information, the customer’s data is being securely stored.
Not complying with PCI Data Security Standards can incur costly fees and fines. Most credit card processors and payment service providers will help you become and stay PCI compliant. However, some payment service providers can also charge PCI compliance fees, though it’s unclear why. Be on the lookout for this extra fee on your statements.
Find the Best Merchant Services Provider for Your Business
Choosing a credit card processor is a huge business decision. When you’re comparing merchant services, it’s more than calculating the per-swipe card fees. Some processors use tiered pricing, while others add a percentage markup. If you’re looking for the lowest card interchange rates, consider a subscription-based pricing model. This locks in the wholesale cost of interchange and avoids extra contract fees.
When selecting your payment processor, it’s also important to consider the types of credit card payments you will want to accept. Studies have shown that the more payment options you accept, the more customers you’ll be able to accommodate. A payment processor with a multichannel of card-present and card-not-present payment solutions will provide you all the payment tools you need to grow your business during this digital era.
Related Content: Subscription vs. Markup: Which is Better for your Business
Avoid Cancellation Fees
Contract cancellation or early termination fees can be costly, especially for business owners. When you’re locked into a year-long contract with a processor and want to switch, you could face a steep fee. At Stax, our monthly subscription means you don’t have to worry about being locked into a contract for a year to avoid paying a fee. You pay a flat, monthly rate and can process as much as you want.
Extra fees and hidden costs can bring down what seemed like a great deal on credit card processing, but you can avoid them with the right processor. Stax’ innovative subscription pricing gives you access to the direct cost of interchange. There are no extra markups and fees and you don’t have to sign a contract. Plus, our easy-to-read statements are transparent and clear on what you’re paying for.
Your business can process as much as you need to without worrying about the hidden fees of traditional merchant service providers. That means no PCI compliance fees, statement fees, or cancellation fees. Put dollars back in your bottom line and take the hassle out of trying to find out what exactly you’re paying for and why.
Interested? Request a demo and see out how Stax’ innovative technology and transparency are changing the payment experience for businesses.