Summary: It’s important to understand the basics of credit card processing fees that are associated with merchant account providers.
As a business owner, it’s unlikely that you’ll want to only accept cash from your consumer base. Now, it might save you some money in terms of the various fees associated with credit card merchant accounts, but in the long run, it makes more sense financially to accept debit and credit cards.
Now, these accounts are essentially run through your bank and functions as a two-way contract between the business owner and the bank that’s issuing the funds. Remember, before you sign that contract, be sure that you are ready to follow all operation regulations that the credit card companies have on paper so you don’t get hit with a plethora of fees.
Ticket size has a substantial impact on your business’s credit card processing fees. Now, if you’re unfamiliar with the term, ticket size essentially refers to the typical credit or debit card sale. The greater the ticket size, the higher the processing costs will be. Since transaction fees tend to have a large impact on smaller transactions, they naturally have a greater impact on the overall costs. Businesses that have low average tickets will sometimes impose a minimum for credit card purchases to avoid the large transaction fee.
The Processing Method
The processing method typically affects which types of fees will apply. There are essentially two general ways that a business can process credit cards: card-present and card-not-present. Card-present refers to a business that swipes cards while card-not-present refers to transaction processes that occur remotely like an e-commerce business for example. Credit card processing charges are typically less for card-present businesses than they are for the latter.
The Bottom Line
There are a variety of different fees that you may face if you decide to go with a merchant account provider. They tend to vary based on the provider that you choose so be sure that you get an idea of what they’re offering before you sign up so you don’t get hit with an assortment of charges.
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