The Six Costs to Consider Before You Sign a Credit Card Agreement


Fees can be confusing, especially when many providers are not clear and upfront about the fees they charge.

With numerous credit cards, debit cards and e-pay options available today why do I need to think about cash?


There is currently over 2.02 trillion dollars in circulation so if you're still handling cash the old way, you may want to discuss cash automation with us today. Fees can be confusing, especially when many providers are not clear and upfront about the fees they charge


Here are the six most important costs to look out for before you sign an agreement with a provider:


Qualified Rate:

This is the base rate many credit card companies quote to potential customers. It’s also the rate most business owners initially think they’ll pay to accept credit cards. The qualified rate is frequently quoted at somewhere between 1.4% and 1.7%. However, it’s usually a gross underestimation of the true cost, because it doesn’t account for the many added fees.


Non-qualified surcharge:

When your customer’s card falls outside the basic credit card category, merchant service providers charge this fee. It is estimated that 70% of credit cards are non-qualified. For example, many credit cards offer rewards points for airline miles, hotel nights or cash back. The cost to provide these rewards to consumers is passed on to the merchant.


Interchange differential:

On top of the "non-qualified rate," the processor will also make you pay the difference in cost between a consumer card and your non-qualified card. For example, a Visa consumer card costs 1.42%, while an infinite card will cost 1.61%. This means that you will also have to pay an interchange differential fee of 0.19%, even though you already paid a penalty through the "non-qualified rate".


This is the piece of the puzzle that makes interchange differential pricing so expensive, as merchants are getting double-dipped on the transaction.


Brand surcharge:

The brand surcharge is a fixed amount — usually somewhere around .1% and .2% — that goes back to the card networks such as Visa, and MasterCard. This fee is fixed by the networks but some merchant service providers may also mark up the fee at their discretion.


Foreign surcharge:

When a consumer pays with a foreign credit card, issued either in the United States or overseas, the merchant service provider adds on an additional fee that ranges anywhere from an additional .4% to 1%.

While these are the most common fees added to transactions, small business owners may also face monthly account service fees, PCI-compliance fees, batch fees to receive funds in your bank account and rental fees for the POS terminal. There are often minimum monthly processing requirements to consider as well. Many providers also require multi-year contracts with hefty cancellation fees if you need to break your contract early.


Process Re-engineering:

Payment methods at the POS have never been greater than today.

Implementing a cash payments process to improve speed of service, mitigate risks associated with internal and external threats, and reduce costs will drive bottom line profitability.


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