Comparing Card Processing Rates As a Merchant: Getting the Best Deal

If you’re a merchant that accepts credit cards, you undoubtedly know exactly what your card processing rate is. You know it’s called a merchant discount rate, and it’s some percentage of the total bill, maybe a flat fee per transaction is also attached. If you did a little research, you would even know exactly how much you pay each month toward this merchant discount fee.

But do you know where that money goes? Or what, exactly, you’re paying for? Probably not, and you’re not alone. Credit card transaction fees are made up of many different elements, so they can seem, at best, confusing.

To help you better understand this fee, we break down the merchant discount rate into three key pieces: interchange fees, card brand fees and what we will generally call “everything else.” Getting to know these pieces will help you to compare rates among processing companies and to know where you can haggle for a better rate.

Interchange Fees

You’ve probably heard this term knocked around quite a bit. It is often used as a synonym for credit card rates in general. In reality, it is only one piece of those fees, albeit the biggest piece.

The interchange fee is the money that your merchant bank pays to the cardholder’s bank to help cover the risk of nonpayment or fraud and the operational costs related to moving funds to your bank. It helps to pay for things such as transaction monitoring and the technology it takes to make a payment happen instantly.

Tip for a better deal: The interchange fee will change based on the transaction type (for example, card present vs. card not present), the type of card used, and the type of business you are in (the riskier your business is for chargebacks, for example, the higher the rate). The lowest interchange rate you can get is called the qualified rate, and there are varying requirements to get it. Talk with the card processor about what those requirements are and then strive to meet them with every transaction.

Card Brand Fees

Credit card brands charge a variety of fees for transactions that involve their cards. The payment industry sometimes refers to them collectively as “assessments.” These assessments are how Visa, MasterCard or Discover get paid – they get a percentage of all transactions involving their credit card.

Tip for a better deal: Unfortunately, there’s little room for negotiation here. These fees are published, however, on each credit card brand’s website, so you can keep your card processing company honest.

Everything Else

The money from this piece of the merchant discount fee is divvied out to the other entities that play a role in processing a credit card transaction, including the processing company and the acquiring bank (i.e. your merchant bank). While a portion of this money covers operational costs, there is also a portion of this fee that covers mark-ups for the processor.

Tip for a better deal: This mark-up portion is where you have the possibility of negotiating a lower rate. Keep in mind too that card processing companies may offer different rates for different services. Make sure you don’t pay a higher rate for a service you don’t need.

No Time to Compare Rates? No Worries.

So now you have a better grasp on that merchant discount rate, but who has the time to do all the research needed to get the best deal? Don’t worry. Community Merchants USA, in partnership with, has an online tool that will send you rates from various processors. All you do is fill out some information regarding your business, and this site will come back with a list of processors and their rates. The best part – it’s free. You’re saving money already.

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