Card Merchant Processing Fees

As a credit card merchant, you know there are fees associated with having a merchant account and if you are a person considering accepting credit cards, there are card merchant processing fees you should consider. Each company may have different rates and the rates and fees are based on the type of business you own. For instance, fees will be different if you have a retail merchant account vs if you have an internet business merchant account. Retail merchant accounts are almost always the cheapest, but knowing the type of fees out there can prepare you for all card merchant processing fees.

The most common and well known of the card merchant processing fees is called the discount rate. The discount rate will make up most of your costs and it is a percentage of the total credit card receipt. For instance, if your discount rate is 2.0% and the customer spends $100, you will owe the credit card processing company $2.00.  The average discount rate is 2-3% in most cases, but depending on what company you are working with it can be larger or smaller than this rate.

Another card merchant processing fee is the transaction fee. This fee is additionally added onto each transaction. This is not a percentage of the charge, but it is a set amount. Most are from $0.20 to $0.30. If you have a customer who spends $100 when added with your discount rate, you will end up paying $2.00 for the discount rate and whatever the transaction rate is, for example $2.20.

There are many other card merchant processing fees as well, but the rest may be optional.  The PIN debit transaction fee, for instance, is only charged if you accept debit cards and have a numerical pin pad. This is a fixed fee, like the transaction fee, but much higher, typically $0.70 - $0.90 per debit transaction when the PIN pad is used. Another set free is called the Address Verification Service Transaction fee or AVS. Though it is a small fee, usually about $0.10, it is added anytime you have to key in credit cards manually.

There are some hidden card merchant processing fees too. One of these is called the daily batch fee. Not every merchant services company charges this fee, but it is a set rate, usually from $0.10 - $0.50 that is added to your account every day that you settle you batch. That may not seem like a lot, but if you are open 7 days a week, that can be an extra $15 a month.

You will also be responsible for your monthly account fee which is a set rate of, on average, $20. You may also be charged an annual fee that can be $100 or more. In addition to those mentioned above, there are other fees as well, most optional depending on the company you have your account from. You should always have a list of your fees upfront before signing a contract and always read the small print.