General Costs Associated with Taking Credit Cards

The costs for processing credit cards break down into four main areas. Set-up fees, monthly recurring costs, transaction costs, and the discount rate.

Set-up Fees: Set-Up fees are fees paid to the merchant account provider upon applying for and setting up the account. This is a one-time fee generally ranging from $0 to $300.

Monthly Recurring Costs: Monthly recurring costs are flat fees that are paid each month regardless of account activity. These fees are similar to bank account fees. They generally range from $10 to $25 each month.

Transaction Fees: Each transaction that is processed with a merchant account is charged a small transaction fee. This fee is generally a flat amount regardless of transaction size; it can, however, vary depending on the type of card being processed. I.e., Transaction fees for American Express are usually higher than Mastercard or Visa. These fees generally range from $0.05 to $0.40 per transaction.

Discount Fees: Each transaction that is processed is also charged on a percentage basis. This is called the discount fee. The discount fee may vary depending on the type of card processed much like transaction fees. These fees generally range from 0.30% to 2.65%.

Things to consider about costs…

You should carefully consider all the costs involved when selecting a credit card processor. While some my offer a low to no set-up fee, they often charge higher fees in other areas. You should select the merchant account that best fits your particular needs. Are you willing to pay more in monthly recurring fees for a lower discount rate? Are you willing to pay a higher discount rate to have a low set-up fee?

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