Two Credit Card Processing Fees

A majority of business owners today rely on credit card merchant processing services to simplify the collection of payments from consumers, especially now that more and more individuals depend on cashless transactions.

Still, there is a growing concern among entrepreneurs about the hefty credit card processing fees normally imposed by banks and other merchant account providers. Business owners must look for ways to reduce credit card merchant processing fees charged on their merchant accounts.

Two Credit Card Processing Fees

1. Interchange Fee. An interchange fee is the fee that card issuers impose on each card transaction. It consists of a certain percentage of the total cost of a purchase, plus a defined per transaction charge. The exact percentage imposed on each card purchase usually varies based on the specific criteria such as the type of credit card used, the item being purchased, the card company or issuer, the type of transaction (example: retail, online, or MOTO) and other related factors.

2. Transaction Charges. A lot of processing companies also impose additional transaction charges on the merchant accounts they extend to business owners. However, such transaction charges are very much different from interchange fees. This is because interchange fees are normally split between credit card networks and their affiliated merchant banks, whereas transaction charges go directly to a merchant service provider such as a bank or an authorized independent sales organization.