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Choosing a Credit Card Processing Company Based on Fees and Costs
If your small business would like to take debit and credit cards — whether online, personally or via phone– you’ll need a credit card processing company to accept them. There are plenty of things to consider as you pick one, like fees and costs.
The U.S. Small Business Administration says credit card processing fees can be go up to a maximum of 5% on all that you earn from your credit and debit card sales. Nonetheless, some companies could charge much less than the rest while giving the same products and level of service.
Below are some of the key credit card processing fees to be aware of:
These are fees charged for each transaction you process, and it’s covered by the payment processor, which pays to the card-issuing bank. Your per-transaction rate depends on a number of factors, including the type of transaction (personal, via phone or online) and type of card (credit, debit or rewards), as well as the size of every transaction (bigger and less transactions lead to lower fees). In-store transactions will be less expensive in terms of interchange fees, because the card is physically present, so there’s lower risk of fraud.
Monthly Statement Fees
The credit card processing company could charge you monthly statement fees to pay the cost of mailing you a statement. It costs around $10 each month.
Application and Setup Fees
You may to pay a fee for a processing service application, as well as for the set up of necessary equipment. The rate can vary significantly, depending on the company.
Monthly Minimum Fee
This is the smallest amount in fees that the processing company should collect in any given month. If you don’t reach this minimum amount, the processing company will collect a charge that makes up the difference for you to meet the minimum. If, for example, the monthly minimum fee is $30 and you only have $24 in credit card transaction fees for one month, you will have to pay $6 more.
Monthly Gateway Access Fee
Some companies charge this monthly fee for their payment gateway, which allows transaction data transmission from your processing system to the credit card companies. Monthly fees cost about $10 – $30.
Early Termination Fee
Early contract cancellation can have you paying this fee.
Don’t worry about these fees because they actually form part of the bigger benefit of using a credit card processing company. They are investment. What’s important is that you know all these fees and terms, and never hesitate to ask the company when you have concerns or questions. If they’re not giving you any or the right answers or resolutions, look elsewhere for another processing company.