Credit Card Processing Fees You Should Be familiar With
Well, standing in the 21st century, it is very important to cope up with the present competitive market. Technology has changed the entire ecosystem of payment. If we talk about the transaction modes, people are now giving more preference to cashless transactions. As a result, business owners are implementing new strategies so that they can easily accept credit cards online from the customers. We at International Payment Solutions offer various advanced payment solutions such as virtual terminal and many more. However, when it comes to online payment processing, the scenario becomes completely different from that of offline processing. Yes, there are many credit card processing fees inextricably associated with the online process.
You might have the best payment processor that really takes care of your business. But, when you get your monthly payment statement from your merchant processor, your decision will definitely be changed. You will see that there are various types of fees added to your monthly statement. It will be very difficult for you to understand the payment structure. Along with the credit card processing fees, the merchant has to pay various types of fees that are applied to credit card transactions.
Considering the present situation where COVID-19 is flattening the growth of small businesses, many small merchants are taking their business online. If they don’t understand the payment structure and various types of payment fees, they might not have a good experience. Moreover, payment processors will not be able to create a solid impression upon the merchants. Well, we at International Payment Solutions understand this concern and therefore, we have elaborated different types of credit card processing fees here. So, have a look at the following points:
Why There Is A Need OF Credit Card Processing Fee
Well, if you are accepting card payments, you have to pay credit card processing fees. This credit card processing fee consists of a credit card network fee, payment processor margin, credit card issuing bank fee. Yes, it is a fact that credit card payment is a real-time process but, merchants do not get the money instantly in their accounts. We have elaborated on the credit card transactions in order to give you a concrete idea.
The consumer initiates the credit card transaction by swiping the credit card. After that, the merchant processor passes the information to the credit card network.
The credit card brand shares the information with the bank that issues the credit card to the cardholder. After that, the bank checks the available credit. Depending upon the available credit, the bank accepts or rejects the credit card transaction and shares the information with the card network
The card network shares the information with the merchant processor and this is how a credit card transaction gets completed.
So, you have understood that credit card network, credit card issuing bank and payment processor play the most important role and this is why a merchant needs to pay credit card processing fee. Now, along with the credit card processing fee, there are some other fees that merchants have to pay. Let’s have a look at the following points to understand these:
Level 3 Data Processing
Well, there is a certain amount of data that should be transmitted to the acquiring bank from the merchant account while making a credit card transaction. In the case of level 3 data processing, more data is required. Here, data is classified into three parts- Level 1, Level 2 and Level 3. Level 3 requires an additional fee. Such data is generally reserved for merchants who accept Government, Corporate and Purchasing credit cards. Payment processors use this data to make a detailed invoice data for the merchants. Moreover, it will help to track the expenses accurately.
Well, if your business accepts the currency of other countries, you have to pay a multi-currency processing fee. Basically, a merchant has two options. A merchant can either accept payment in the local currency or in the customer’s local currency. If you accept payment in your local currency, you don’t need to pay any additional processing fee. But, for the latter one, merchants have to multi-currency processing fee.
Account Change Fee
If the merchants change certain things in their account such as banking information, addresses, pertinent business information, the merchants have to provide an account change fee to the merchant processor. The fee generally covers the administrative cost that is inextricably associated with the change. Payment processors make this change and there are many merchant processors that do not take any fee for making changes in the account.
Not An IPS Merchant?
By now, you have probably understood various credit card processing fees. Now if you want to elevate your business to the next level, you must pair your business with any merchant processor solution such as International Payment Solutions. It is one of the most efficient payment processors. So, what are you waiting for? Get in touch with us.