How The Payment Processor Determines Credit Card Processing Fees

Dec 28, 2021 | blog | 0 comments

The credit card processing fee paid by the merchant is based on several factors.

Each credit card processor evaluates accounts differ depending on the type of business and processing history. 

Numerous aspects go into setting a merchant’s credit card processing fees and three major players in the equation:

#1 Credit Card Issuer: The business that issues the credit card is referred to as the “issuer.” 

Citibank, Chase, Capital One, Wells Fargo, and Bank of America are just a few examples.

#2 Credit Card Network – These are the credit card firms. (Visa and Mastercard). 

#3 Payment Processor – The company handles a merchant’s credit card transactions.

Visa and MasterCard charge fees directly and then pass them on to the merchant. 

Credit Card Network Fees

The following are the average costs for the four major credit card issuers. These percentages may change on a yearly or bi-annual basis. 

VISA: 1.43 to 2.4%

Mastercard 1.55 to 2.6%

American Express 2.5 to 3.5%

Discover 1.56 to 2.3%

5 Popular Pricing Models Used By Payment Processors

#1 Interchange-Plus Pricing: Credit card networks set the “interchange.” The “plus” is the additional markup charged by your processor.

#2 Tiered Pricing segments different transactions depending on the credit card type. Usually, higher reward credit cards mean more expensive transaction fees.

#3 Blended Pricing: This is a flat fee for all credit cards, rewards cards, and debit cards alike.

#4 Bundled Pricing entails a fixed rate plus downgrading fees. This method considers how they process transactions, their industry, and the time it takes for the transaction to complete.

#5 Membership-Based Pricing: You’ll pay a monthly or annual membership fee plus the network’s interchange rate.

Remember that transaction fee could also be influenced by how the transaction is handled (keyed or swiped), type of credit card (Rewards card, premium cards, etc.). Also, if your company is deemed “high risk,” you may be subject to higher fees.

When customers swipe rather than insert the card, they typically pay between 1.5 and 2.9 percent of the purchase price. For all keyed-in transactions, it’s around 3.5 percent.

Your Trusted Payment Processor In Richfield, Ohio. 

Do you own or plan to start a business in Richfield, Ohio? By choosing Certain Pay as your credit card processor company, you may avoid hidden fees and develop a valuable partnership.

At Certain Pay, we understand the importance of transparency with our customers regarding fees. Learn more about how our traditional processing services and modern point of sale systems can help you expand your business.



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