Processing fees paid by business owners

 

The acquirer is responsible for collecting all the fees paid by the business owner. Acquirers employ a variety of pricing strategies. Common pricing strategies (which are generally self-explanatory) include; Bundled, Tiered, Interchange Plus, and Modified Interchange Plus. Some methodologies are more transparent to the merchant than others.

Regardless of the contract structure or the level of transparency, there are three types of fees that represent the total cost of card acceptance paid by business owners.

 


These are fees paid to the issuing banks. These fees are determined on a per-transaction basis by the transaction amount, card type, processing method, data content, merchant category, and size of issuing bank. These fees are published by the networks and are typically the same per card swipe for small businesses and national chains.

Visa’s Interchange Fees:http://usa.visa.com/merchants/operations/interchange_rates.html
Mastercard’s Interchange Fees:http://www.mastercard.us/merchants/support/interchange-rates.html
Discover’s Interchange Fees:http://ctlr.msu.edu/download/cashiers/DiscoverICApr13.pdf

Interchange fees, for most merchant categories, average between 1.25% and 1.80% per sales transaction.

These are fees paid to the networks such as; Visa, MasterCard, Discover, and Pulse. These  fees are determined on a per transaction basis primarily by the transaction amount, the card type, processing method, data content, merchant category, and monthly volume.  These fees are standardized by the networks and are generally the same per card swipe for small businesses and national chains.

Network fees, for most merchant categories, average between .13% and .16% per sales transaction.

These are fees paid to various merchant processing entities including; sales agents, ISOs, POS providers, acquirers, core processors, and acquirer sponsoring banks. These fees are not published and are typically very different per card swipe for small businesses vs. national chains. Small and medium businesses typically pay 10 to 100 times more in acquiring fees per sales transaction than national chains.