The Bank Card Industry

When a credit card transaction occurs, the merchant gets charged a minimum of two fees:

1. Transaction fee
2. Discount rate fee

Most processors charge around 20-25 cents each time a credit card transaction occurs.   If you sell a lot of small ticket items (drinks, donuts, etc) then this is the MOST important fee to negotiate.

For the best deal, make sure the discount rate is different for each type of credit card.   If it is not, then you are definitely paying too much.   Depending on where you are in the USA, expect to see rates from 1.49% for DEBIT cards up to 2.39% for higher risk transactions (like a bar/strip club).

Of course, there are many other fees that you will likely be charged in addition to the two listed above.  

A settlement fee is charged when you submit your credit card batch at the end of the night/shift.  Sometimes, in no-tipping environments, the settlement fee can be reduced or eliminated by switching to HOST based processing.  

The monthly statement fee is for producing and mailing a printed statement to your business address.   If you are doing a lot of business, often this fee will be waived or paid by the processor.  If you don't have sales volume yet, ask about a web statement instead to save money.

Sometimes, you will be charged for leasing equipment.   A typical rate is $20 to $45 per month for 36-48 months.   Unless you cannot afford your own card terminal, be careful about signing leases.

Often processors will quote a monthly minimum fee.   This means that regardless of your account's activity, a monthly fee will be charged.

Contract termination fees also appear frequently.   If you ever decide to change processors, this fee (or a pro-rated portion of this fee) will become due.  Often a termination fee is required in order to get the most competitive rate... so don't be turned off by this type of fee.   If the processor knows you are in this for the long run, they will work harder to earn your business.

Many processors will charge fees on "gross amounts" versus on the "net amount".   For example, a $24.00 meal with a $5 credit might be charged on a $19 basis or on a $29 basis.   Check out the computation method carefully.

Also be aware that some processors charge a transaction fee for each authorization and then another transaction fee when a tip is added.   You should be careful to pay a fee only on settled transactions... not authorizations.

You Are Paying Too Much If...

• Your VISA rate is the same as your MASTERCARD rate
• Your transaction fee is over 22 cents per swipe
• Your DEBIT CARD rate is not below your VISA/MC rate.
• Your rate has not been reduced since March/2005.
• You pay a monthly statement fee (some exceptions)
• You don't understand your card statement
• You had to purchase your own credit card terminal
• You are leasing a card device
• Your equipment has a shorter warranty than your contract term.
• You did not get at least 3 quotes (1 local, 1 web, 1 through a referral)

Positive Feedback Software has connections with many banks, processors and card issuers.   We can help you keep more of your hard earned money.