Credit Card Transaction Fees for Small Businesses

When you process credit card payment on your small business, some transaction fees is charged which varies according to merchant account provider.

When you accept a credit card payment, the processor deducts anywhere from 1 to 5 percent as a fee. The majority of this percentage goes to the card issuing company. Some merchant account providers may add their own percentage to this fee, which is why the base rate is not always consistent. If you have less-than perfect-credit, your merchant account percentage will be closer to the higher range.

In addition to the percentage rate, there are also transaction fees. This transaction fee is charged on each and every purchase processed through your merchant account provider, and is typically from $0.25 to $0.50 per transaction. This amount goes directly to the merchant account provider. It may be figured in after the initial percentage is taken off or before this takes place.
You may also have a minimum monthly transaction fee. This may require that you process a certain amount of cards or dollar amount each month. Minimum fees are usually around $15 each month.

Each card issuer charges a different percentage rate. Visa and MasterCard usually charge the least, while Discover and American Express typically charge a higher percentage. This is something to consider, not only when setting prices for your products, but also when deciding which cards you are going to accept. Visa and MasterCard are the most popular cards, so it behooves you to accept at least one of these two. It will be up to you to decide whether you need to add American Express and Discover.

Before you select your merchant account provider, make sure that you completely understand all of the different fees that you will be required to pay. There may be setup fees, gateway fees, penalties, and other fees that will be automatically deducted from your account each month.

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