Common Q & A: Credit Card Processing

Interchange vs. Tiered Processing

Why am I charged a fee to process credit card payments?:

1. 1. • To gain a clearer understanding of this, it's crucial to recognize that prominent credit card brands such as Visa, MasterCard, Discover, and American Express impose banking transaction fees each time one of their cards is processed through a credit card processing system. Consequently, these fees are subsequently passed on to the merchant when these cards are used for payments. The specific fees charged to a merchant depend on the nature of their business.  

How are my rates calculated?

1. 1. • Many credit card processing agencies determine rates through a straightforward two-step process. The initial calculation considers the type of business you operate and the volume of transactions you process. 

        • • • • Tiered Processing Example: Let's consider Joe and Mary, the owners of a small corner market, who typically process around $5000.00 in monthly transactions. In this scenario, their rates are determined by two key factors: the nature of their industry and the estimated total transaction volume. Given that their business is expected to handle a relatively lower volume of credit card transactions, they are likely to incur a higher rate.

This means that, due to their limited transaction volume, they may experience a slightly elevated processing rate compared to businesses with higher transaction volumes. The type of industry they are in also plays a role in determining their specific processing rates.

• • • • • • • Interchange Processing Example: Let's look at Sam, who is the proprietor of three distinct grocery stores, each equipped with four terminals. Sam oversees a significant monthly transaction volume, with each of his stores processing over $55,000.00.

Due to the substantial transaction volume Sam handles across his stores, he qualifies for special rate discounts within the interchange processing program. This program offers him preferential rates and cost savings, recognizing the higher volume of transactions his business consistently processes. These discounts are a reflection of his business's efficiency in handling credit card transactions on a larger scale.

Why Are Small Businesses Charged Higher Rates Sometimes?

• • • • • • • Drawing from the examples provided earlier, it becomes evident that processing rates are typically contingent on transaction volume. Merchants with lower credit card transaction volumes have traditionally incurred higher rates, as their utilization of the credit card processing system is not as extensive as businesses processing thousands of dollars daily. In contrast, businesses with substantial transaction volumes often qualify for more favorable transaction discounts due to their frequent use of the system. 

How does WEBJEDININJA help small business owners with their rates?

• • • • • • • Regardless of their business structure, all our merchants are enrolled in the interchange platform. This ensures that every one of our clients will be subject to a consistent flat rate throughout their tenure as our clients when processing transactions. 

Is there an application fee to qualify for services?

• • • • • • • There is a one-time application fee of $175 associated with processing your application. However, you can have this processing fee waived by enrolling your business in one of our membership plans. 

How can I receive the lowest interchange rate quoted?

• Our agency operates on a membership-based model. To be eligible for the most competitive rate featured on our page, merchants are required to enroll their business in our Platinum Membership. This membership is priced at $175 per month and encompasses a range of valuable benefits, including:

  1. 1. A personalized website tailored to your business.

     2. Support and guidance for online marketing and advertising initiatives.

     3. Access to our complimentary online business class and community.

     4. Inclusion as a preferred in-house provider for other businesses within our community.

     5. Entry to our extensive document template resource center, which offers support for legal consultations, access to our preferred attorney network, and much more.

Cash Discounting

What is Cash Discounting?

• Compared to Interchange and Tiered Pricing, Cash Discounting refers to a scenario where a payment processor is configured before it's provided to a merchant. In this setup, processing fees are passed on to the merchant's customers at the point of checkout. The customary fee that customers of the merchant will encounter typically averages around 4%. This percentage is then appended to the customer's receipt, and those opting to pay by credit card will incur it as a one-time convenience fee. 

What are some of the additional fees I need to keep in mind when thinking about applying for a credit card processor?

Additional fees that can occur that are not listed within the standard fee agreements above are:

• Monthly Minimum Fee $25.00

• PCI Compliance Fee (Varies Based on Business Risk- Average Annual Fee for Non-Compliance $49.95)