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Are credit card industry fees confusing to you? They are to most people, so today we thought we’d explain about those “miscellaneous” fees and charges that show up on your monthly merchant account statement.   Monthly Minimum Fee: fee which guarantees the merchant will be paying a minimum amount each month in processing fees. If a merchant’s discount fees do not equal their monthly minimum fee they will be charged the difference between the two in addition to their discount fees. (The merchant discount rate (MDR) is a fee charged to a business by the company that processes its debit and credit card transactions.) Example: A bicycle shop had a great month! Most of their customers paid with cash (hey- it could happen!) so their monthly processing fees

Credit card processing can be confusing for business owners, with all the different rates, terms and fees. One common pricing structure is the percentage-based model, but this can sometimes lead to businesses paying more than they should. The goal of this post is to explain the Interchange fees, which are the core of all credit card processing charges. What is Interchange? Interchange is the “wholesale price” for processing credit card transactions, set by Visa and MasterCard (and their stakeholders like banks). It’s the price paid by a merchant’s bank to the card-issuing bank whenever a credit card is used. You can think of Interchange rates as similar to the cost of parts needed to build a bicycle—it’s a base cost from which everything else is calculated. Interchange rates

I recently received a call from a longstanding merchant who asked me this question: What do all of the rates mean on my statement? I LOVED the question- especially coming from such a loyal merchant who admitted to reading very few statements since they hired us 9 1/2 years ago! So here is your answer my friend: Qualified Check Card Rate: This rate is applied to swiped cards that are attached to a checking account. The % is one of the lowest you will pay. Check Cards can be identified because they typically list Debit or Check Card on the face of the card. They can also be used with a PIN number but then Debit processing rates would apply instead of the Qualified Check Card Rate. Qualified

As complicated as the credit card processing industry can be, there are only 3 things you REALLY need to know.  #1 Understand The Rates There are 500+ tiers of pricing when you combine all credit/debit card types. It is important to familiarize yourself not only with the pricing but also how the pricing relates to your specific business Card pricing rates vary based on card type and how the cards are processed. Take some time getting to know both VISA INTERCHANGE and MASTERCARD INTERCHANGE rates. Remember that Interchange is the cost before any markups and before the costs or markups associated with capturing, authorizing, and settling each transaction, essentially the “wholesale” cost.  When you have a great understanding of the various card types and the actual costs, you