8/13/2019 Average Credit Card Processing Fees
2/5
age Credit Card Processing Fees
1/10/2013
3:48:3//www.cardfellow.com/blog/average-fees-for-credit-card-processing/
stead of simply guessing, it's better to get an accurate idea of
processing fees for your business by taking a fewore variables into
account. Before we jump into the nitty-gritty, I should note that
each credit card processing
uote that you get here at CardFellow has a complete breakdown of
fees. Our software will give you a very detailedtimate of
processing costs, and it's free to sign up .
he amount a business pays in processing fees relative to gross
volume is called an effective rate . Estimating th
fective rate for your business is the best way to determine
average processing expenses, and here's what youeed to know to
calculate an accurate figure.
rocessingrocessing MethodMethod
our business's processing method has a large impact on typical
credit card processing charges because it affectsow many and which
types of fees will apply.
ard-present and card-not-present are the two general ways that a
business can process credit cards. As the
ames imply, card-present refers to a retail business that swipes
cards, and card-not-present refers to businessesat process
transactions remotely, such as e-commerce or mail order
businesses.
terchange fees , processing markup, and third-party charges are
all affected by your business's processingethod. Credit card
processing charges are typically less for card-present businesses
than they are for card-not-esent businesses. Here's why.
CardCard --PresentPresent BusinessesBusinesses
Pay lower interchange fees - roughly 1.60% plus a $0.10
transaction fee.Have lower monthly fees (roughly $5 - $15) and
transaction fees ($0.08 - $0.10) because they don't
needgateways
Are low risk and get lower interchange plus rates from
processors (usually in the area of .09% - .15% plushere at
CardFellow )
Have lower occurrences of chargebacks and fraud that contribute
to overall cost
CardCard --NotNot --PresentPresent BusinessesBusinesses
Pay higher interchange fees - roughly 1.90% plus a $0.10
transaction fee.
Have higher software costs that are usually associated with
online gateways (generally $10 - $15 a monthplus a $0.01 - $0.08
transaction fee)
Are higher risk and pay higher interchange plus markups from
processors (usually in the area of .10%- .40% plus a $0.08 - $0.10
transaction fee here at CardFellow)
Have higher occurrences of chargebacks and fraud resulting in
greater overhead expense
8/13/2019 Average Credit Card Processing Fees
4/5
age Credit Card Processing Fees
1/10/2013
3:48:3//www.cardfellow.com/blog/average-fees-for-credit-card-processing/
Tweet 1 0 6
$50 / $10,000 * 100 = 0.50%0. 50% + 2.15% = 2.65%
5. Finally, figure the impact monthly fees will have by using
the average monthly charges from the "ProcessingMethod" section,
and using the same formula as we did in figuring the average ticket
impact. As a card-not-present business, I used monthly fees of $15.
Here's how mine works out:$15 / $10,000 * 100 = 0.15%
0.15% + 2.65% = 2.80%
nd there we have it. An online business that processes $10,000 a
month with an average ticket of $50 will paybout 2.80% of volume or
$280 a month in credit card processing charges.
eep in mind that the quotes you receive through CardFellow are
very competitive, and we only allow interchangass through , which
is the least expensive, most transparent form of pricing. If you're
comparing quotes outside of ur marketplace, you may want to
increase your average a little to be safe.
is entry was posted in Credit Card Processing Info . Bookmark
the permalink .
Responses to Average Credit Card Processing Fees
Like1
steve fan says:November 3, 2011 at 4:35 pm
Very helpful article but Ive just started an online store and
our CNP fees are closer to 3.85% at an average ticket of just under
$100. I shopped around too fees that
arent even included in this 3.8% include the cash bond anew
business has to place ($60,000 for me) in order to ensure that our
credit card account has enough
money to pay for chargebacks, foreign transaction costs, and
other stuff. So this article while helpful is understanding the
true cost of online cnp fees to entrepreneurs.
Its always more expensivewhen youre starting anew business.
Reply
Ben says:November 3, 2011 at 5:01 pm
Thanks for you comments, Steve. It sounds like you didnt use
CardFellow to find your credit card processor
Its important to understand that the majority of credit card
processing expense is paid to card-issuing banks in the form of
interchange fees
averageinterchange fee for an online business is roughly 1.90%
2.00%.
Add to that theassessment from Visa and MasterCard of 0.11%, and
then a competitiveprocessing markup of interchange plus 0.15%,
and
youre up to 2.26% plus about $0.20 per transaction.
Even after gateway fees and miscellaneous fees, you shouldnt be
up around 3.85%. Im thinking that you may be paying fees on a
tiered p
model instead of less expensive interchangeplus.
A $60,000 non-interest bearing reserve account is quite out of
the ordinary, especially for a business with only a$100 average
ticket. Ive never
seen a reserve that hi h, even for hi h-risk businesses.
