How Pricing Varies Between Credit Card Processing Providers

Credit card processing invoices are as complicated as telephone bills – arguably even more difficult to understand. There are a mind-boggling number of line items, most of which are cryptically described and mean nothing to the average businessperson. So when approached by a potential new provider, how does one compare pricing?

The first step would be to ask the salesperson for a detailed comparison between your current invoice and their services. Because so many credit card processing companies price their services differently, it generally takes an “expert” to make a proper comparison.

One example is the way that providers charge you for the fees from the big four card networks: MasterCard, Visa, Discover and American Express. These fees, also referred to as “interchange fees”, generally account for 75% or so of your invoice amount and are paid to the various card issuers. Every provider pays these fees at the same rate to the card networks but they are “packaged” in many ways when charged to your business. There are hundreds of different rates based on the card network, the type of card being used and in some cases, your business type.

Some providers will pass these fees through to you at the same rate they’re charged, while others will charge you a base rate for all card types and then a surcharge for transactions that cost them more. Still others will bundle these fees into what they will call a “discount rate”.  And this is just one example of many on your invoice.

So when confronted with a proposal for credit card processing services, ask the salesperson for a detailed comparison and have them explain how they charge various fees. While it may seem complicated and overwhelming, spending some time on this can save your business money, making you more profitable.