What Are the Lowest Credit Card Processing Fees?

The lowest credit card processing fees are in the 1.5 to 1.6 percent range, and the most expensive credit card processing fees go as high as about 10 percent. Of course, getting the lowest processing fee rate available should be a priority for every business that accepts credit cards. However, there are many variables and factors that dictate the credit card processing fees (or discount rates, as they are often called) that will be available to you and your business.

What Are Discount Rates
?

Credit card discount rates are the fees, as a percentage of the sale, collected by banks that process your credit card transactions. Every time you accept a credit card payment at your business, the bank will deduct a certain percentage of the transaction as payment for its processing services. As stated above, discount rates can range from very small amounts to taking a considerable percentage of the transaction amount.

There is no exact method used to determine the discount rates for any particular business or industry. However, some factors that are crucial in determining discount rates are

  • the credit rating of the business and the business owner,
  • the type of business or industry in which the business is actually involved, and
  • whether your specific industry type is one normally associated with a high level of charge backs, or credit card refunds.
Different Discount Rates

Discount rates are usually cheaper for types of businesses considered low risk. Low-risk businesses include ones that offer customers tangible items on a cash and carry basis and that are usually not subject to high volumes of returns or refunds. A good example of this type of business would be a convenience store or gas station. Generally speaking, these types of businesses experience very little in the way of product returns or requests for refunds. Once you purchase a soft drink or a tank of gas, you usually won't attempt to return it.

However, if you are involved in a kind of business associated with a high level of customer complaints or requests for refunds, then many banks will charge you a substantially higher discount rate. This is because a bank is at greater risk of having to provide a refund for a credit card transaction. For example, businesses involved in the sale of very expensive or exotic products can often be the brunt of complaints and refund requests by unsatisfied customers.

In addition, banks normally charge higher discount rates for transactions conducted over the Internet. They charge more for these types of electronic transactions because the risk of fraud, non-delivery and an unsatisfied customer is much higher than at traditional brick-and-mortar outlets.

Many banks offer credit card processing services, and you should be diligent in your search for one that best meets your needs.
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