Early termination fee: Some credit card processors impose a fee between $295 and $495 if they set you up with a merchant account and you terminate the contract, which is typically three years.Assessment fees: The assessment fee goes to the credit card network, such as Visa or Mastercard.The interchange fee depends on the issuing bank and how you processed the payment, such as card-present vs. Interchange fees: The interchange fee represents the biggest chunk of credit card processing fees ― often between 2% and 3.3% of the purchase amount ― and goes to the issuing bank, such as Citi or Chase.The cost may range anywhere from $50 and $100 and may include a monthly equipment lease charge. Setup fees: Typically required for brick-and-mortar businesses, the setup fee is to install the hardware and software needed for processing credit card transactions.Fees that the merchant may be expected to pay include: In some cases, the credit card processor or MSP may also charge a monthly fee. Typically, the merchant pays a flat fee per transaction plus 1% to 3% of the transaction amount. What Are Typical Credit Card Processor Fees?Īs might be expected, all this processing comes at a cost and has a name: credit card processing fees. The merchant’s bank credits the funds to the merchant’s account.The MSP sends the funds to the merchant’s bank, minus any fees.The MSP collects the funds from the issuing bank that, in turn, charges the consumer’s account.At the end of the day, the business owner, also known as the merchant, sends authorized transactions to the MSP. The POS is also the system that collects all transaction details. In most cases, the MSP requires the business owner to purchase software and hardware, such as a POS system, to process the transaction. The issuing bank approves or declines the transaction.The credit card network ― typically Visa, Mastercard, American Express, or Discover ― communicates with the issuing bank to get the authorization.The credit card processor sends the information of a credit card transaction electronically to the credit card company. Put simply, credit card processing goes through the following steps: However, banks typically don’t process credit card payments in-house, except for American Express and Discover.Ī credit card processor serves as the go-between for the consumer and the issuing bank in the credit card payment process. Source: Generally, credit card processing goes through a bank, independent sales organizations (ISO)/ merchant services providers (MSPs), or mobile credit card processors.
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