Credit Card Transaction Fees

Opening a business involves a lot of legwork. There is a lot of things that you need to know and have the resources to afford to keep a business up and running. The last thing you should have to worry about is understanding transaction fees. This is where Dynamic Merchant Solutions comes in. We are a merchant account provider and provide you with software and other necessary equipment to process and scan payments made by credit cards. We work with various credit card networks and the banks that issue the cards. We handle all the processing of your payments to have one less thing to worry about.

Where do All These Various Fees Come From?

The owner of a small business is in operation to make money. Credit card companies, and processing merchant services, also must profit to help you run your business. We are starting to live in a cashless society. Paper money is a rarely used form of payment anymore. Credit cards and various other online payment methods have become the norm. Every business has overhead costs and allowing your customers the convenience of paying by credit card does incur transaction fees. There are base or costs and markups. A business owner cannot change them. There are stops before getting to the customer to swipe their card. The bank that issues the cards, the credit card company, the processing merchant, to the business, and then a customer can swipe their card.

Base Fees

With a base fee, there is no negotiation possible by a business owner. They are made up of both assessment and interchange fees. They are the same regardless of the chosen credit card processing company.

Assessment fees are from the major card networks. These ads Discover, Mastercard, American Express and Visa. They charge a fee every time one of their cards is processed. They vary between .13%-.15% per transaction.
Interchange fees go to the originating bank that issued the credit card that the customer is using. This is also paid every time a transaction is completed. The major card companies charge their inner change fees as well.

Inner change fees vary depending on the circumstances in which a credit card is processed. There is a different fee for paying over the phone, in person, or online. These fees can vary depending upon which major credit card company, the customer uses.

Business owners need to understand the issuing bank’s rules and the credit card company to estimate how much it will cost them per month for credit card transaction fees.

These variables are why the interchange fees published by the major credit card companies are so long and complex. It’s so difficult for business owners to estimate how much they’ll pay each month for credit card transactions. There can be certain situations where different stores and types of businesses will charge extra for various services. For example, MasterCard charges 1.9% for gas transactions. For car rental and lodging and hotel interchange fees, they charge 1.58% plus an additional $.10 for these purchases. Each credit card company is very different. That’s why some people choose certain credit cards over other credit cards because of different lifestyles. For somebody that shops a lot however, MasterCard might be a better choice in this case as visa charges 1.51% plus $.10 in certain stores per transaction. Visa does not charge the 10% fee for gas, renting a car and lodging, however. The type of business you own, may determine what credit cards you choose to accept.

Interchange Rate Fee

The card networks decide the interchange rates. It can depend upon whether there is a discounted rate, a wholesale rate, and an inner change reimbursement fee. The business merchants cannot negotiate these fees either. These vary on the type of transaction that is performed and volume of sales.

Credit Card Processing Merchant Fees

As a credit card processing provider for businesses, Dynamic Marketing Solutions must charge a small fee to conduct business. All credit card processing merchants charge a small fee. It may also be called a processing rate fee. It can be most easily explained by comparing it to withdrawing from the Cash App or PayPal. They process both bank payments and credit card payments. The price varies between the two and whether you want an instant withdrawal or one that takes longer, determines their processing fees. Ask your payment processor for exact rates that are charged for their specific interchange charge fees. The pricing model of your plan also determines how much you will pay per transaction as well.

Authorization and Technical Issue Fees

At times, a business can be charged if there is a mistake when entering the information, a mismatch happens or missing certain information completely. It can also be known as a misuse of authorization fee or a transaction integrity fee. There are also authorization fees. If a card declines, a fee is charged. The credit card processing company may charge a flat rate that considers all factors in mind. This can make it easier to estimate your total business costs per month. Some credit card processing companies can also separate transaction and authorization fees.

Fraud Protection Fees

To prevent any misuse of credit cards and prevent fraud, an address verification service is usually part of any business that accepts credit cards over the phone or internet. In person manual entry credit card purchases also use an address verification service. Ask your credit card processor with her to include this in a flat rate per transaction fee or separated. A gateway fee is something that is only utilized when something is bought online. Not all businesses require having this feature, so it is usually not part of a flat rate fee. Many businesses have both in person as well as web credit card payments. If your business accepts payments over the phone, you may incur a voice authorization fee. The credit card processing company must use a telephone service to get authorization to do a transaction at times. It is not always required, however if a regular customer purchases something quite different or out of their normal behavior purchasing pattern, then voice authorization be may be required. It can also be a backup method if a business is Internet goes out or their software isn’t working now to authorize purchases. It is not used very often, so it’s usually a flat fee per transaction.

Voice Authorization Fee: This is a telephone dial-up service for transaction authorization. When a transaction is outside the normal range of a particular customer’s purchasing behavior, a voice authorization may be triggered. The customer will need to provide additional information over the phone to verify he or she is, in fact, the cardholder. Occasionally, merchants use this service as a backup if their terminal, internet connection, or software isn’t working to authorize transactions. Most businesses will rarely need this service, but it’s typically a per-transaction, flat fee if you do.

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