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Credit Card Processing Fees And Rates For Online Businesses In 2023

Are you running an online business? If your answer is Yes, you ought to need credit card processing services to accept credit card payments.

According to industry analysts, each transaction's typical credit card processing fee ranges from 1.5 to 3.5 percent, while the precise proportion varies on various variables. Also, be aware that fees for carrying a credit card are quite different than fees for credit card processing.

Do everything you can to comprehend and reduce credit card processing fees if you run a business and want to take credit as payment. Here, this blog will discuss credit card processing fees in 2023. So, let's start.

What are the Credit Card Processing Fees?

Whenever customers make a payment through credit cards, online business merchants must pay fees to accept credit card payments. Generally, these fees depend on the credit card types you as a merchant accepts and also include multiple different layers of charges. These charges are -

Interchange Fees:

This fee is also known as a swipe fee or discount rate. Business entities pay this fee to the credit card company directly. Due to the heightened risk of fraud involved in online transactions when a credit card isn't available, this cost can be higher. Also, remember that interchange fees might vary depending on the card type, fee level, and business type.

For example, you have to pay higher fees if you run high-risk businesses such as forex, IPTV, or adult industries.

Not all payment service providers offer their services to high-risk businesses, so you should look for a service provider compatible with high-risk businesses, such as PayCly. PayCly is compatible with most high-risk businesses and offers the best high-risk payment gateway, high-risk merchant account, and also international credit card processing according to the business needs.

Payment Processor Fees:

It's also conceivable that the payment processor will levy extra costs to enable the payment. The cost of the payment processor can be divided into smaller fees that accumulate over time, such as monthly or annual account fees, equipment rental fees, withdrawal fees, statement fees, and others.

Assessment Fees:

The credit card network must be charged assessment fees for a purchase to be made. Be aware that assessment costs are paid on monthly sales, not per transaction.

Let's have a look at major credit card companies' fees -

Credit Cards Network Average Interchange Fees Average Assessment Fees
Visa 1.15% + $0.05 to 2.40% + $0.10 0.14%
MasterCard 1.15% + $0.05 to 2.50% + $0.10 0.1375% (transactions under $1,000); 0.01% (transactions $1,000 or more)
Discover 1.35% + $0.05 to 2.40% + $0.10 0.13%
American Express 1.43% + $0.10 to 3.30% + $0.10 0.15%

How Much Does Credit Card Network Charge For The Processing Fees?

It's crucial to realize that the bank that issues your credit cards, the payment processor, and the network all have a significant role in determining how much you will spend on credit card processing fees. Nevertheless, average credit card processing fees fall within a particular range for each of the four main credit card networks.

Credit Cards Network Average Processing Fee
Visa 1.43% to 2.4%
MasterCard 1.55% to 2.6%
Discover 1.56 % to 2.3%
American Express 2.5% to 3.5%

What Are The Different Pricing Structure For The Processing Fees?

Each major credit card network's processing fees can fluctuate within a certain range. However, the pricing strategy selected for those fees can explain a portion of the variation. Merchants must understand how each pricing model functions since they may choose to accept a pricing model that best suits their businesses.

Tiered Pricing: This pricing structure has varied prices for transactions that fall into several tiers or buckets. For instance, certain qualifying transactions may incur a lesser rate, while others may incur higher fees. Typically, businesses that conduct most of their transactions in the lowest tiers benefit from this form of pricing.

Flat rate price: A flat rate fee is just as it sounds. Under this pricing structure, the credit card processor will bill the merchant a fixed percentage of each transaction and a minor transaction fee (often between $0.20 and $0.30). With this pricing structure, retailers may easily project their future costs associated with accepting credit cards.

Interchange Plus pricing: Merchants who choose this option will pay the interchange rate for each transaction and additional costs. You could be charged the interchange rate plus an extra percentage or a minor transactional fee when using Interchange Plus pricing.

Model Average Fees
Tiered Pricing 3.5% for non-present transactions
Flat rate price 2.75% to 2.90% per transaction
Interchange Plus pricing 2.2% + $0.22 per transaction

Are there any other additional fees?

In a simple sentence, yes, card issues and networks also ask for additional fees. As a merchant, once you decide to accept credit card payments from your customers, you will also be subject to the following fees. These fees do not vary from one processing company to another and are required by every payment processor.

  • Acquirer Processing Fees (APF) - All U.S. corporate Visa credit card transactions must pay this fee.
  • Fixed Acquirer Network Fees - This fee applies to all card brands. It is based on the volume, the number of locations, and whether or not the card was present at the time of the transaction.
  • Kilobyte Access Fee - This is a transaction-specific fee for settlement upon authorization.
  • Network Access and Brand Usage Fee - All settled or refunded credit and debit card transactions are subject to this fee from MasterCard.

Final Thoughts -

Since credit card acceptance is one of the crucial steps in any customer's purchasing procedure, every online business needs it. You must realize that accepting credit card payments requires more than just credit card processing. A merchant account and payment gateway are also required for credit card processing.

It is essential to learn about the credit card processing fees in 2023 because these card processing fees may considerably raise the overall expenditures of your company. One important strategy to increase your earnings and create a successful business is to be aware of how these fees operate and the strategies you may employ to reduce them.

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