Understanding the Elements of an Overall Credit Card Processing Fee

As the holiday season comes into full prime, educate yourself on what is happening every time your credit card gets swiped.

Credit card processing is a crucial consideration for many businesses. With this borne in mind, it is necessary for a business (and consumers) to understand fully the charges associated with credit card processing.

Three basic components are associated with the overall costs of credit card processing. The components of the overall free include the free paid to the bank that initially issued the customer’s credit cards, a fee paid to the card brand itself and a fee to the company that actually facilitates the processing of a particular charge. These fees vary in amount by financial institution.

The fee paid to the issuing financial institution is called the interchange fee. It is calculated using a percentage of the total transaction plus an additional nominal charge.

The fee assessed by the credit card brand also typically includes a percentage and a flat fee. However, in the case of Visa, that brand also charges a merchant an additional monthly fee.

Finally, the processing fee itself is a set amount for each transaction. Keep in mind that the processing fee is the only component of the overall costs associated with credit card transaction processing that is open to negotiation. The interchange and brand fees are set and cannot be changed.

Moving forward, this information should help you understand where the money is coming derived from credit card processing fees.

Back to top