When setting up a credit processing system, one of the main things you need to notice is the credit card processing fees. The credit card processing company will charge you a certain fee for the each financial transaction you make using the customers’ credit card. This rate will be different for different credit card processing companies and you need to a bit of research on this before signing up for a credit card processing service.
Understanding the different fees involved in the credit card transactions
Many business owners find the different card processing fees involved in each financial transaction to be confusing. However, with some research, you can easily figure out the various fees that a credit card processing company charge for each such transaction.
The main component of the credit card processing fees is the interchange fees. This is the amount charged by the credit card processing firm for accepting these financial transactions and for routing them to the concerned bank for final processing. Of course, the bank will also charge a small amount for their services in facilitating the payment. So, the money reaching your end will be deducted by these two rates.
On top of the interchange fees, you are expected to pay many other credit card processing charges, which different credit card processing companies charge at different rates. Some credit card companies follow a volume-based approach for some of these rates, where the processing charges will be calculated based on the total volume of your sales. This might be more profitable in some cases.
Then, there is the transaction-based pricing model, where the rate is calculated for each transaction and not for the total volume of sales. This method might result in a higher amount of card processing fees in most cases. Then, there is the flat rate approach, where you will be charged a certain amount on a monthly or annual basis irrespective of the total volume of sales or the total number of transactions you had during this period.
So, when calculating the total card processing fees for your firm, you also need to look at how they are calculated and see whether you are getting a smaller amount if you opt for a different package. There are many websites and forum pages online, which help you make the comparison of the total card processing fees charged by the different credit card processing companies.