What is the Average Credit Card Processing Fee? • The Havok Journal

Working with different payment processing systems gives you different options regarding credit card processing fees. However, they all tend to remain within the same range of fees. Many of the fees are based on the type of services you require and the industry you work in.

Average Costs for Credit Card Processing Fees

On average you can expect credit card processing fees to be anywhere between 2% and 4% for each individual transaction. The actual fee will be dependent on the type of payment processor you work with and the type of business transactions you are managing.

What Makes Up a Credit Card Processing Fee

This is the fee that you pay as a merchant when you accept a credit card or debit card for a service or product you are offering. The fees come from the parties involved with the credit card transaction. There are different types of fees to consider, which are the flat fee, incidental fee, and transaction fee.

The Transaction Fee

This fee occurs for every transaction you incur with the credit card payment. It is made up of the assessment fee, the interchange rate, and the payment processing company markup. The highest cost comes from this fee specifically, as the issuing bank, the credit card network, the merchant’s bank, and the payment processing company all tack on a small percentage to this fee.

Interchange Rate

This is the fee that the issuing bank will charge once the customer applies their bank card for a purchase. The issuing bank will take a small percentage of the cost of the transaction. The merchant typically covers most of this amount. This is paid through an interchange reimbursement, which is calculated based on the type of card, the brand, and the risk level associated with the merchant’s company. Another risk factor includes how the merchant decides to accept the payment, be it online, at a point of sale system, or with a mobile device. It typically comes at a fixed rate regardless of what payment processing system you use.

Assessment Fee

This is a fixed fee that is included on top of the other fees for each transaction. It is often coupled with the interchange rate and collectively called an interchange fee. All payment networks have their own form of interchange fee which is updated around twice a year. Not a lot understand how this fee is calculated, as it is decided internally and not managed by the public sector. Usually, the fee is based upon the risk your business may pose. If you have a reputable company, you can expect this fee to be much lower.

Payment Processor System Markup

Lastly, the payment processing company you chose to work with will charge an additional amount on top of the previous fees mentioned. This allows them to make a profit for the service they provided you. The pricing plans will be different based on the type of contract you choose as well as the benefits associated with each membership level. There are typically three types of plans, which include flat-rate plans, tier plans, and interchange fee plans.