What Do Banks Charge for Credit Card Processing?
Charges for credit card processing vary by the type of business. Internet business pay higher fees than retail business because of the additional risk doing business online. Following are the standard fees that merchants should expect for credit card processing.
Other People Are Reading
-
Discount Rate
-
Discount rates are fees charged by the merchant's bank to do business. Internet transactions are assessed between 2.14 and 2.90 percent of net (sales minus returns) volume. Retail transactions are assessed between 1.59 and 1.79 percent of net volume. Included in these fees are Interchange fees, passed through to the cardholder's credit card company. These fees range from 0.62 to 2.70 percent of volume. In addition to the type of merchant, these rates vary depending on the type of card used for the transaction.
Transaction Fees
-
In addition to assessing a percentage of volume, merchant acquirers also charge a fee per transaction. For Internet sales, transaction fees range from $0.20 to $0.29 per item. Retail transactions range similarly range from $0.20 to $0.30 per item. Interchange accounts for $0.13 to $0.25 per transaction.
-
Chargeback Fees
-
Customer dissatisfaction can result in a chargeback, costing between $10 and $25 per item. Merchants bear the burden of proof when customers report a problem with the transaction to his credit card company. Not only must the merchant prove that the transaction was made in good faith, he must also prove that he properly authorized the transaction. Proper authorization for a retail transaction includes swiping a card through a merchant terminal, validating the customer's signature on the back of the card, and verifying that the credit card number on the receipt is the same as the one on the card. Internet merchants should ask for the credit card's expiration date and security code (three-digit code on the back) when approving a transaction.
Monthly Fees
-
Monthly fees for accepting credit cards include a statement fee, averaging $10 dollars per month, and a gateway fee, ranging between $5-$15 per month. A gateway fee is applicable only to Internet transactions and is assessed by a third-party software provider to process the transaction.
Other Fees
-
When a retail merchant is unable to swipe a credit card for authorization, a keyed authorization may be assessed an address verification service (AVS) fee between 5 and 10 cents per item. This fee will also apply to Internet merchants that do not swipe credit cards. Other fees include PIN or debit transaction fees, averaging 70 cents per transaction, ACH/batch fees, ranging from 5 to 50 cents daily; and voice authorization fees, ranging from $0.75 to $1.50 per authorization.
Hidden Fees
-
Some merchant providers will also assess the following fees: File fees, security fees, audit fees, over the limit fees, conversion fees and bill back fees. These fees are not standard in the industry, and merchant providers that quote these fees should be avoided.
-
References
- Photo Credit Man balances credit card image by rolffimages from Fotolia.com
