Mobile credit card processing is a service that is offered at a fee. As a businessperson, it is important that you have a good understanding of the fees associated all merchant services, including credit card processing services.
The fees associated with a transaction usually vary according to your provider of merchant services. You should pay close attention to your monthly bill in order to ensure that you are not actually paying more than you should for your mobile credit card processing. Discussed below are some of the fees that can be associated with your credit card processing. Check them out!
Transaction fees are the fees that are directly associated with every transaction you run. Transaction fees can be broken down into two – interchange and cents per transaction. They are usually the only mandatory fees that are associated with mobile credit card processing as the credit card companies are the ones that set them. You are basically paying Discover, Visa, Amex, and Mastercard for the ability to be able to accept their cards.
For interchange transactions, the rates usually vary depending on the type of card that you are running. Basically, the more expenses the card company incurs to maintain the card – perks, rewards, cashbacks – the more expensive the interchange. This also means that business credit cards are characteristically the most expensive while debit cards are typically the most economical.
One-off fees refer to the mobile credit card processing fees that occur only once. One-off fees can include early termination fees, terminal fees, payment gateway fees, chargeback and retrieval fees, address verification fees, PCI compliance fees, reprogramming fees, and setup fees.
There are also some many other things to pay attention to on your mobile credit card processing statement at the end of every month. Companies providing merchant services usually make huge profits off of the simple fact that most businesses are unaware of something as basic as what they are paying for, leave alone why. You should choose a merchant service provided that allow your payment processing statement to be simple and readily available to you. Transparency of your service provider is key as it ensures that you are not aware of any hidden fees or charges.
Besides interchange, many service providers tend to make an extra profit by simply charging their clients business non-mandatory fees. You can see these non-mandatory fees often on your monthly statement, but they are never actually required for you to be able to accept credit card payments. You should keep your eye out on monthly minimal fees, batch fees, IRS report fees, annual fees, next day funding fees, IRS report fees, and other on your monthly statement.
Mobile credit card processing pricing models
It is also important that you understand the pricing models used by providers of credit card processing services and how they usually increase their savings.
Just like its name suggests, providers will charge an extra percentage on top of the interchange for every transaction run. Because interchange typically varies based on the type of card, there is no any good way to be able to predict what exactly you will be paying monthly with this model. The amount you will pay in markups increases with the extent to which you process.
Flat Rate is simply a variation on percentage markup pricing models. Flat rate models don’t charge a percentage extra in addition to the interchange. Instead, it makes each credit card the same percentage. Square is one of the most popular example of this. Irrespective of what credit card is being used, Square will always charge you 2.9%. This means that it gets more expensive as you process.
Tiered rates is usually the most expensive pricing model. Basically, tiered rates simply put different cards in different tiers and charge based upon those qualifications. It is important to mention that the tiers are usually arbitrary and are determined by the provider. What providers observe is the most popular types of cards and ensure that they are staying in the most expensive available tier. Otherwise, the providers can also add additional fees for vague and various online or mobile credit card processing services.
Simple Flat Rate Subscription
The best choice for companies are subscription-based pricing models. You only pay a membership monthly in exchange for the known direct cost of interchange. Basically, all you have to worry about is the flat membership fee and a direct cost of the cards that you have processes irrespective of how much you process.