PROCESSING COSTS
What Are You Really Paying to Accept Cards?
A low advertised rate is only part of the picture. Before comparing providers, understand what you pay across a normal month and which services are included.
THE TAKEAWAY
Compare the total cost for the way you accept payments, rather than a single percentage.
Know what sits behind the rate
Card acceptance costs can include interchange, card network charges and the provider’s own fees. Visa explains that interchange is a transfer between banks; the merchant pays its financial institution for processing services. A provider may bundle costs together or show them separately.
Read more than the transaction line
Review your statement and agreement for monthly service charges, gateway or software fees, equipment costs and charges associated with disputes. Ask which apply to your account and which are optional. A fee is easier to assess when you know the service behind it.
Make the comparison meaningful
- Use the same processing volume and payment mix for each quote.
- Separate payments accepted in person from online or manually entered transactions.
- Check whether hardware and software are included or billed separately.
- Ask for the full pricing schedule in writing.
Use a monthly snapshot carefully
Dividing the processing fees you identify by the related card sales gives you a useful starting point. Keep the same cost categories in both comparisons. One unusual month, a different card mix or a separate equipment bill can distort the result.
The question is whether the complete arrangement fits your business, including its service and equipment needs.
Further reading: Visa’s explanation of fees and Square’s processing cost overview.
Keep exploring
Before You Choose a Merchant Services Provider →
Payment Terminal or POS System: What Does Your Business Need? →