Comparing Credit Card Processing Rates

To compare the card processing cost offered by one card processing company or merchant account provider and the cost offered by another, it is important to first have a good understanding of the different fees which usually come with credit card processing services. Here is a guide to some of them.

Transaction Fee: This would be the fee which is charged to you for every credit card transaction you process. This can range anywhere between 10 cents and 25 cents. For business that only process a few large transactions every month, transaction fees are usually not an issue; however, for those businesses that handle numerous small transactions such as coffee shops, it is important to scout for the best per transaction fee that you can find.

Percentage Fee: Aside from the per transaction fee, most merchant service companies also charge a percentage fee based on the total amount of your credit card transactions. This can range from one percent to five percent. The percentage fee can be higher if you have an online company wherein payments and transactions are done online. This is because merchant service companies see online transactions to be riskier.

Batch Fee: This would be the fee that may also be charged to you for every batch of transactions that you close out or send to the bank to be processed. This is about 25 cents as of 2011. Generally, the batch fees are not very significant unless you usually close out batches several times within the day.

Equipment Fee: Since you would need to have equipment or machines to be able to process credit card transactions, you would also need to allocate a budget for them. You have the option of either leasing or buying the credit card processing machines or terminals or the software (for online transactions). Generally, buying them is more recommended, provided that you can afford them since doing so would give you more savings in the long run.