Credit Card: Understand The Different Processing Fees

The processing fees on Credit cards can be a little complex to businesses who aren’t accustomed to knowing how they work. Even amongst those people who have been around with the various payment processors be it once or twice, the fees can appear a bit mysterious and somewhat foreign. Basically, banks offer different processing fees as per their policies Like icici , hdfc & Axis Bank Credit cards etc.

The different types of processing fees are listed below making it easier for you to understand them.
Your Transactional Fees

These are charged every per-transaction fee that generally show up on your statements. They usually include the following:

  • Assessment and Interchange fees that would go directly to your credit card company.
  • The Markup fees of the Processor.

The Card association fees are always a side note for all the various fee types as they may be scheduled, transactional or incidental.

The Scheduled Fees:

Scheduled fees are the fees that are a part of your markup fees and even your payment processors and the other services charge. The fees lived below could be included in your scheduled fees:

  • A statement or online reporting fees
  • The monthly and annual fee
  • Equipment fees charged for payment gateways, POS software, terminals, etc.,
  • IRS report fee
  • PCI compliance fees

Scheduled fees are typically the recurring fees, either annually or monthly, and can make a big difference with payment processing in your overall associated cost. Make sure you get the facts about all of them so you can make comparisons between various companies before you choose your payment processing partner.

The Incidental Fees

These fees aren’t usually a part of the markup, such as:

  • Early termination or cancellation fees
  • Chargeback Fees
  • NSF (non-sufficient funds) fees
  • PCI non-compliance fees
  • AVS fees

If you use an address verification system, you may have surcharges that too per transactions which are associated with the use of the AVS system when taking phone orders, mail or online. Make sure you’re aware of what the fees are with your service provider and how frequently you receive these types of orders

  • Batch fees
  • Application or setup fees

Some of these fees listed above are one-time fees while the others are per-incidence fees. And if all goes well, some of these fees are that you’ll never need to pay. Others, you must pay more frequently.

Markup Fees versus Wholesale Fees

Many payment processors do poor jobs of explaining these fees. The Wholesale fees go to one of these two places:

– All the Banks that issue credit cards, in the form of interchange fees.

– All the Credit card associations, in the form of card association fees.

These fees are usually fixed prices, meaning they will be the same amount that of with every payment processor or credit card and are always non-negotiable. Markup fees are different from the wholesale cost. These fees go to some places which include:

  • Payment gateways
  • Add-on equipment providers
  • Software providers

These fees change from one credit card payment processor to the next or are variable fees.

They are usually negotiable. So, these are the different fees related to credit cards, make sure you know about them in detail before proceeding.

Related:- Mistakes to Avoid with Credit Card Processing


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