Common Q & A: Credit Card Processing
Interchange, Tiered, & Cash Discounting
Interchange vs. Tiered Processing
Why am I charged a fee to process credit card payments?:
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?
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.
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.
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?
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.
Additional Fees To Keep In Mind
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:
How To Avoid the $25.00 Monthly Minimum Fee
To avoid this fee our systems are best served for business who are processing on average about $100/week or more. If you are processing less, we encourage you to participate on our PAY AS YOU GO plan which is our basic service place that provides you with a valid processing option rate that is compatible with an APPLE or ANDROID device. To learn more about this program please go our PAY AS YOU GO section of this website.
How To Avoid a PCI Compliance Fee
To avoid a PCI Compliance Fee your business must be PCI Compliant at all times. Once your account is approved and after our organization has built a processing relationship with you, our PCI Partners will run a risk evaluation on your business. Once this evaluation has been conducted they will contact you via email letting you know if you must complete the PCI Risk Assessment. If your business is required to complete this assessment, you will have 60 days to become compliant as per federal regulations before a non-compliant fee is assessed. To avoid a non-compliance fee, your business must be compliant, which means our PCI Partner must have on file your completed compliance assessment.