With tiered pricing, the rate structure is divided into tiers - most often a lower-priced tier, called "qualified," and rate tiers that are higher, known as "mid" or "non-qualified." Merchants are often attracted to this type of pricing by the low qualified rate - in reality, though, it applies to a few transactions, while most end up in higher tiers. Let’s say your volume expands enough to place you in a cheaper tier for the interchange rate: as long as you’re in a flat-rate structure, you won’t realize the benefit of less expensive interchange fees, because you’re locked into one rate. This has the advantage of predictability every month, which can make estimating your costs of doing business easier.īecause interchange fees vary by a number of factors, a potential drawback of flat-rate pricing is that your interchange fee will always be the same, even if some variables could have made it lower. Flat-rate pricingįlat rate pricing is exactly what it sounds like: The processor charges a flat fee, consisting of the interchange fee, the card brand fee and its own margin fee. Processors generally charge fees in one of the pricing structures discussed below. In addition to the credit card network, payment processors also charge fees. The rate is set by that provider and may be more flexible in terms of charges due to streamlined processing. In OptBlue, your business signs a contract with an approved third-party provider that enables you to accept American Express cards from customers. To address these concerns, it introduced OptBlue, a service for small businesses with less than $1 million per year in revenue. The company is sensitive to its reputation for higher charges, however. This makes processing fees higher, and American Express relies on generating profits through its higher processing fees. That’s because American Express does double duty as a credit card issuer and a payment network. Why are American Express credit card processing fees higher?Īmerican Express is thought of as being a more expensive credit card network than its competitors. Be prepared for rates to be higher if the card is manually keyed in or an international transaction. These figures are based on limited publicly available information, so your rates may vary. The table below lists the minimum assessment fees for credit cards by network. Other incidental fees may arise from specific transactions being unique, such as foreign transaction fees. These fees will also depend on a number of factors that differ from network to network: Some networks will charge higher rates for credit card versus debit card usage, while others may charge higher rates when the transaction volume is greater. The assessment fee is a much smaller credit card processing fee, one that you pay directly to the card network (Visa, MasterCard, Discover or American Express). In addition to the card network, your fees will vary based on the type of card, method of payment and MCC. These ranges are based on publicly available information for credit cards fees for debit cards are often lower. Interchange fees vary widely based on a number of factors, including the credt card network (such as Visa or Mastercard), whether the card is a debit or credit card, how the payment is processed and the merchant category code.īelow is a list of the ranges of interchange rates charged by the major credit card networks. These fees are often presented as some percentage plus an additional fixed amount. The biggest piece of the fee and rate pie is eaten up by interchange fees, which are collected by credit card issuers. A discount rate consists of interchange fees, assessment or service fees and markups from payment processors. The discount rate is the percentage of a sale that goes towards paying credit card processing fees. This section outlines some common practices by payment processors, which you’ll need to be aware of before beginning to shop around. How to lower your credit card processing fees.Payment processing fees or merchant service provider (MSP) fees.
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