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Credit Card Processing Fees – What It Is & How It Works?

Credit card processing fees are a necessary evil for merchants. This is especially true for small businesses that often have to pay more in processing fees than they earn in profits on each credit card sale. But what are these fees, exactly? And how do they work?

In order to accept credit cards as payment, merchants need to sign up for a merchant account with a credit card processing company. This company will provide the business with a credit card terminal or point of sale system that the merchant can use to swipe customers’ credit cards. The merchant account also includes a merchant bank account, which is where the money from credit card sales is deposited.

When a customer uses a credit card to pay for something, the credit card processing company will charge the merchant a fee for each transaction. This fee is generally a percentage of the sale amount, and it can range from around 2% to 4%. The credit card processing company also charges the merchant a monthly fee for maintaining the merchant account.

In addition to these fees, the merchant will also have to pay a fee to the credit card company that issued the customer’s credit card. This fee is called a interchange fee, and it is generally around 1% of the sale amount.

So, how does this all work? Let’s say a merchant has a $100 sale. The merchant will need to pay a credit card processing fee of around $4 (4% of $100), a monthly fee of around $10, and a interchange fee of around $1. So, the total cost of accepting this credit card payment would be $15.

As you can see, credit card processing fees can add up quickly. That’s why it’s important for merchants to compare rates from different credit card processing companies and find the one that offers the lowest rates.

So, what are credit card processing fees?

They are a percentage of each sale that merchants have to pay to credit card processing companies in order to accept payments via credit card. This fee can range from around 2% to 4%, and it’s important for merchants to compare rates from different companies to find the one that offers the lowest rates. Additionally, merchants have to pay a monthly fee and an interchange fee to the credit card company that issued the customer’s credit card. These fees can add up quickly, so it’s important for merchants to be aware of them.

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