All You Need To Know About Credit Card Processing In Any Business

By siliconindia | Monday, 19 January 2015, 03:18 Hrs

3. Only interchange plus pricing

The bulk of credit card processing fees go to Visa and MasterCard—these are called “interchange” and are set in stone. “Interchange-plus pricing” is the fairest form of pricing, and is comprised of interchange plus a constant processor markup.

With interchange plus pricing, there is never a question of how much the processor will charge per transaction since those costs are fixed. Having this structure ensures there are no tricky fees or hidden costs, unlike tiered pricing structures.

4. Know where your money goes

Before you can negotiate the best credit card processing fees for your small business, you have to know what's flexible. There are two areas of cost that even processors can't change. The first is interchange, and the second is assessments.

Interchange is the same for all processors and it's the rate that card-issuing banks charge processing banks (called acquiring banks) to accept their credit cards. Interchange rates are a fixed component of credit card processing expense, and they're the same for all processors. You can check out the actual interchange fees for Visa and MasterCard here.

Assessments are a series of rates and fees charged by Visa and MasterCard, and they are the same for all processors.

The only area of processing cost that is negotiable is the processor's markup over interchange and assessments. The markup is where you want to attack

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