Credit Card Processing Fees: Which Are Avoidable?
You don’t give your products & services away for free & neither do payments companies. Whether you like it or not, getting money from your customers’ bank accounts to yours has its costs. As a result, you pay rates & fees on every transaction that your business processes.
This is, however, avoidable if you choose to only accept cash. However, by doing this, you’d alienate a large majority of consumers who may want to visit your business, but do not carry cash at all times. As a result, every business owner needs to accept credit cards in order to reach their earning potential.
Payment Processors vs Payment Facilitators
Due to high demand in the market for payments solutions, there are tons of entities trying to get a piece of the pie. Specifically, third-party payment processors & ISOs resell the payment solutions of payment facilitators. As a result, they must charge the merchant for an additional ‘layer’ of fees.
Payment facilitators, on the other hand, eliminate middlemen from the equation & provide the leanest pricing in the industry. When you work with a payment facilitator, you open a merchant account directly with them. As a result, you eliminate most, if not all, unnecessary fees when you work with a payment facilitator.
Avoidable Credit Card Processing Fees
If you look at your merchant statement & find it hard to make sense of all the numbers on it, then you are not alone. This is done by design. The more complex your merchant statement is, the easier it is for less than transparent payment companies to sneak in unnecessary fees to grow their margins.
- IRS Reporting Fees: The IRS does not charge payment processors a reporting fee. Therefore, an IRS Reporting Fee is most likely a fabrication.
- PCI Compliance Fees: Maintaining PCI compliance at the merchant-level does not cost any money. Therefore, a PCI Compliance fee is often unnecessary.
- Statement Fees: Unless your statement is being physically mailed to your address, then there is often no cost associated with the delivery of your monthly statement.
- Payment Gateway Fees: In essence, the use of a gateway is the service provided to a merchant. Therefore, a ‘payment gateway fee’ is the service fee associated with the service. While this fee may not be completely avoidable, it can be negotiated.
Take a look at your merchant statement to see if you can spot any of these fees. If you can, then your current provider is most likely using these fees to mask the reality of them being unnecessary markups.
Unavoidable Credit Card Processing Fees
Interchange fees are the unavoidable fees that card brands charge merchants for the use of their cards. Major card brands in the United States include Visa, MasterCard, Discover, & American Express. These costs are often passed on to merchants by payment companies.
To illustrate this, think about how often you see that a business does not accept American Express. The reason is that interchange rates are generally high for American Express cards. As a result, many merchants refuse to accept the cost of processing American Express transactions (and they don’t).
This is not the best business practice. Not only does this show that the business does not possess the resources necessary to accept a common form of payment, it also shows that the business does not value convenience for its customers.
So what can a business owner do? The business owner can eliminate as many of the unnecessary fees as possible. By doing so, he or she will have more resources to fund the unavoidable costs of interchange.
The Payment Facilitation Model Is Lean
The payment facilitation model is the leanest, most transparent model in the payments industry. With the understanding that accepting payments is a common practice in business, payment facilitators have chosen to make the required solutions more accessible to business owners.
However, this comes with great cost, the requirements for becoming a payment facilitator are comparable to that of becoming a small bank.
Nevertheless, by eliminating middlemen, payment facilitators are able to eliminate unnecessary fees, only charging merchants for the costs involved in the actual processing of transactions.
Your Bank Won’t Offer 2.5% Flat Rate & Neither Do Our Competitors
Our pricing structure is as follows:
- Card present transactions – 2.5% + $0.10 per transaction
- Card not-present transactions – 3.05% + $0.10 per transaction
- $0 in unnecessary fees
- Free merchant account set up
That’s for all card types! The reason we offer flat rate is pricing is to offer our clients transparency & consistency. To see how our pricing stacks up to the competition, click here.