Credit card processing is the system by which businesses accept and process payments made with credit cards. It involves a series of steps and parties that work together to authorize, authenticate, and settle the transaction between the cardholder (customer) and the merchant (business).

Here's an overview of the key components and steps in credit card processing:

1) Cardholder:

The customer who uses a credit card to make a purchase.

2) Merchant:

The business that accepts credit card payments for goods or services.

3) Point of Sale (POS) system or payment gateway:

The technology or software used to capture and transmit the credit card information for processing.

4) Acquiring bank or merchant account provider:

The financial institution that partners with the merchant to process credit card transactions.

5) Card networks:

Organizations like Visa, Mastercard, American Express, and Discover that set the rules and regulations for card transactions and facilitate communication between the parties involved.

6) Issuing bank:

The financial institution that issues the credit card to the cardholder.

Steps in credit card processing:

1) Authorization:

When a customer makes a purchase, the merchant's POS system or payment gateway captures the credit card information and sends it to the acquiring bank.

2) Authentication:

The acquiring bank forwards the transaction details to the card network, which routes it to the issuing bank for verification. The issuing bank checks if the card is valid and has sufficient funds or credit available.

3) Approval or decline:

The issuing bank sends a response (approval or decline) back through the card network and acquiring bank to the merchant. If approved, the merchant completes the sale.

4) Settlement and funding:

At the end of the day, the merchant submits all approved transactions in a batch to their acquiring bank, which then submits them to the respective card networks for payment. The card networks redistribute the funds to the issuing banks, which in turn deduct the transaction amounts from the cardholders' accounts. The acquiring bank deposits the funds, minus any fees, into the merchant's account.

Throughout this process, various fees are charged by the parties involved, such as interchange fees, assessment fees, and processing fees. The specific fees depend on factors like the type of transaction, the merchant's industry, and the credit card network involved.

PCI Compliance refers to the process of adhering to the Payment Card Industry Data Security Standard (PCI DSS), which is a set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment. By being PCI compliant, businesses can effectively minimize the risk of data breaches and protect sensitive cardholder information.

The PCI DSS is maintained by the Payment Card Industry Security Standards Council (PCI SSC), an independent body established by the major credit card brands, including Visa, Mastercard, American Express, Discover, and JCB.

To achieve PCI compliance, a business must meet the 12 main requirements of the PCI DSS, organized under six categories:

Build and maintain a secure network and systems:

Requirement 1: Install and maintain a firewall configuration to protect cardholder data.

Requirement 2: Do not use vendor-supplied defaults for system passwords and other security parameters.

Protect cardholder data:

Requirement 3: Protect stored cardholder data.

Requirement 4: Encrypt transmission of cardholder data across open, public networks.

Maintain a vulnerability management program:

Requirement 5: Protect all systems against malware and regularly update antivirus software or programs.

Requirement 6: Develop and maintain secure systems and applications.

Implement strong access control measures:

Requirement 7: Restrict access to cardholder data by business need-to-know.

Requirement 8: Identify and authenticate access to system components

A Point of Sale (POS) system is a combination of hardware and software that enables businesses to manage transactions, process payments, and perform various operational tasks at the point where goods or services are purchased by customers. The primary function of a POS system is to facilitate and streamline the sales process, allowing merchants to accept cash, credit cards, debit cards, and other forms of payment.

In addition to processing payments, modern POS systems often include various features that help businesses with inventory management, customer relationship management, employee management, sales reporting, and analytics. These systems can be customized to suit the specific needs of different industries, such as retail, hospitality, or food service.

A typical POS system includes hardware components like a cash register or tablet, a barcode scanner, a receipt printer, and a card reader, as well as software that manages the overall functionality and integrates with other business applications. By using a POS system, businesses can improve their efficiency, reduce human error, gain valuable insights, and enhance the overall customer experience.

Interchange in credit card processing refers to the fee paid by the merchant's bank (also known as the acquiring bank) to the cardholder's bank (also known as the issuing bank) for each transaction made using a credit or debit card. This fee is a necessary part of the electronic payment ecosystem, as it helps cover the costs associated with processing transactions, managing risk, and providing various services to cardholders.

Interchange fees are typically calculated as a percentage of the total transaction amount, Often accompanied by a fixed per-transaction fee. These fees vary depending on several factors, including the type of card used (credit or debit), the card network (Visa, Mastercard, American Express, etc.), the type of merchant, the merchant's industry, and the level of risk associated with the transaction.

Interchange rates are set by the card networks and are updated periodically. Merchants do not pay the interchange fees directly; instead, they pay a combination of fees to their payment processor or merchant service provider, which includes interchange fees, assessment fees from card networks, and processor markup fees.

You can find the interchange fee guides for Visa and Master card by clicking the two links below:

Visa

Master Card

American Express and Discover Card do not currently provide interchange costs to the public in a transparent way as Visa and Mastercard do.

Interchange plus pricing and tiered pricing are two common pricing models used in credit card processing.

Interchange plus pricing is a transparent pricing model that breaks down the cost of each transaction into two parts: the interchange fee, which is set by the credit card network (Visa, Mastercard, etc.), and the markup fee, which is charged by the payment processor. The interchange fee is the same for every processor, but the markup fee can vary depending on the processor's pricing model. With interchange plus pricing, the markup fee is a fixed percentage or dollar amount above the interchange fee, so you can see exactly how much you're paying for each transaction.

Tiered pricing is a more complex pricing model that groups transactions into different tiers or categories based on factors such as the type of card used (debit, credit, rewards, etc.), the risk level of the transaction, and the size of the transaction. Each tier has a different processing rate, which can be a flat rate or a percentage of the transaction amount. Tiered pricing can be less transparent than interchange plus pricing because it can be difficult to determine which tier a transaction falls into and what the actual cost is.

In general, interchange plus pricing is considered more transparent and fair because it separates the actual cost of the transaction from the processor's markup fee, while tiered pricing can be more confusing and potentially more expensive, especially if a merchant processes a lot of transactions that fall into higher pricing tiers.

Some merchants, however, prefer tiered pricing due to the fact that they like know the flat rates for the card categories that they are paying. This is generally a disadvantage due to processors markup is typically higher on the tiered pricing model.

A point of sale (POS) system can offer numerous benefits to your business, streamlining operations, improving customer service, and providing valuable insights to support growth. Here are some of the key advantages of implementing a POS system in your business:

1) Faster and more accurate transactions:

A modern POS system can help process transactions more efficiently, reducing human error and speeding up checkout times. This can lead to improved customer satisfaction and increased sales.

2) Inventory management:

A POS system can help you track inventory levels in real-time, providing accurate and up-to-date information on stock levels. This enables better inventory control, reduced stock discrepancies, and more informed decision-making when it comes to reordering products.

3) Sales reporting and analytics:

POS systems can generate detailed sales reports, helping you identify top-selling products, sales trends, and customer preferences. This information can be invaluable in making strategic decisions about product offerings, pricing, marketing, and promotions.

4) Employee management:

A POS system can help manage employee schedules, track hours worked, and monitor sales performance. This information can be used to improve staffing decisions, reward top performers, and identify areas where additional training may be needed.

5) Customer relationship management (CRM):

Many POS systems offer built-in CRM capabilities, allowing you to collect and analyze customer data. This can help you better understand your customers, personalize their experience, and target them with tailored marketing campaigns and promotions.

6) Integration with other systems:

POS systems can often be integrated with other software systems, such as accounting and payroll software, e-commerce platforms, and marketing tools. This can streamline your business operations and improve overall efficiency.

7) Payment flexibility:

A modern POS system can accept a wide range of payment methods, including credit and debit cards, mobile wallets, and contactless payments. This flexibility can help you cater to your customers' preferences and potentially increase sales.

8) Enhanced security:

POS systems can provide advanced security features, such as end-to-end encryption and tokenization, to help protect sensitive customer data and reduce the risk of fraud.

9) Scalability:

Many POS systems are designed to grow with your business, allowing you to add new features, functions, and locations as needed. This can make it easier to expand your operations and adapt to changing market conditions.

In summary, a POS system can significantly enhance your business operations by improving transaction efficiency, providing valuable insights, simplifying inventory and employee management, and offering better customer service. By investing in a modern, feature-rich POS system, you can position your business for growth and success.

A point of sale (POS) system can make and save a business money in various ways beyond discounting, employee theft prevention, online ordering, and customer retention programs. Here are some additional benefits that contribute to a business's financial success:

1) Improved transaction speed and accuracy:

A modern POS system streamlines the checkout process, resulting in faster and more accurate transactions. This enhances customer satisfaction and can lead to increased sales and repeat business.

2) Better inventory management:

A POS system with real-time inventory tracking helps maintain optimal stock levels, ensuring you always have the right products available when customers need them. This can increase sales, reduce waste, and improve cash flow.

3) Comprehensive sales reporting and analytics:

POS systems provide detailed sales data, offering insights into customer behavior, product performance, and sales trends. Armed with this information, you can make data-driven decisions to optimize product offerings, pricing, and marketing strategies, ultimately increasing profits.

4) Enhanced customer experience:

A POS system can help provide a seamless and personalized customer experience by offering flexible payment options, faster checkout, and targeted promotions based on customer preferences. This can lead to higher customer satisfaction and long-term loyalty, resulting in increased revenue.

5) Integration with other systems:

POS systems can be integrated with various software systems, such as accounting, payroll, and marketing tools, streamlining your business operations and improving overall efficiency. This can save time and resources, allowing you to focus on growing your business.

6) Scalability:

Many POS systems are designed to grow with your business, allowing you to add new features, functions, and locations as needed. This can make it easier to expand your operations, adapt to changing market conditions, and seize new revenue-generating opportunities.

6) Reduced human error:

POS systems minimize errors associated with manual processes, such as entering prices or calculating change. This can save your business money by reducing instances of incorrect pricing or cash handling mistakes.

7) Increased tip collection:

Signing and tipping on screen, also known as digital tipping, can increase tips for businesses by leveraging technology to make the process more user-friendly, convenient, and socially influencing. See how to increase my tips later on this page for more information.

In summary, a POS system can make and save a business money by improving transaction efficiency, optimizing inventory and sales strategies, enhancing customer experience, streamlining operations through integration, and supporting business growth. These benefits contribute to increased revenue and cost savings, positioning your business for long-term success.

Signing and tipping on screen, also known as digital tipping, can increase tips for businesses by leveraging technology to make the process more user-friendly, convenient, and socially influencing. Here are some reasons why digital tipping can lead to higher tips:

1) Suggested tip amounts:

Digital tipping interfaces often provide suggested tip percentages or amounts, making it easier for customers to calculate tips. This can lead to customers selecting a higher suggested amount rather than figuring out their own tip.

2) Social pressure:

When customers sign and tip on a screen in front of the employee or cashier, they may feel a subtle social pressure to leave a more generous tip. This phenomenon, sometimes referred to as the "guilt factor," can lead to increased tipping.

3) Convenience:

Digital tipping simplifies the process of adding a tip to a transaction. With just a few taps, customers can quickly and easily add a tip, which can result in more frequent and larger tips.

4) Customization:

Some digital tipping systems allow businesses to customize the tipping interface to encourage higher tips. For example, businesses can use personalized messaging, display tip percentages in an appealing manner, or show a progress bar towards a tipping goal.

While specific statistical data varies across studies and industries, research has shown that digital tipping can increase the average tip amount compared to traditional methods. For example, a study conducted by Square, a popular POS system provider, found that customers using their platform tipped 37% more often when presented with a digital tipping screen compared to cash tips. In addition, the same study found that digital tipping led to a 20-40% increase in the average tip amount.

These results, however, should be taken with caution as they are specific to Square's platform and may not apply universally. The impact of digital tipping on your business will depend on various factors, such as your customer base, industry, and the specific digital tipping interface you implement. Nonetheless, incorporating digital tipping can create a more user-friendly and convenient tipping experience, which has the potential to increase tip amounts for your business.

A virtual terminal is a web-based application that allows merchants to process credit card payments without the need for a physical point-of-sale (POS) system or credit card terminal. It enables businesses to accept card payments by manually entering the customer's credit card information into the virtual terminal interface, typically accessed through an internet browser on a computer, tablet, or smartphone.

Virtual terminals are particularly useful for businesses that process card-not-present transactions, such as phone or mail orders, or for businesses that do not require a physical POS system to handle in-person transactions. Some common features of virtual terminals include:

1) Secure payment processing:

Virtual terminals use encryption and other security measures to protect sensitive cardholder information and ensure secure transmission of payment data.

2) Payment authorization:

The virtual terminal verifies the credit card information, checks for available funds, and authorizes the transaction in real-time.

3) Transaction management:

Virtual terminals often provide options for managing transactions, such as issuing refunds, voiding transactions, or processing recurring payments.

4) Reporting and analytics:

Many virtual terminals offer reporting tools that allow merchants to view transaction history, generate sales reports, and analyze payment data.

5) Integration with other systems:

Virtual terminals can often be integrated with other software systems, such as accounting, customer relationship management (CRM), or e-commerce platforms, to streamline business operations.

To use a virtual terminal, merchants typically need to have an internet connection, a compatible device (e.g., computer, tablet, or smartphone), and a merchant account with a payment processor that offers virtual terminal services. The fees associated with using a virtual terminal may include setup fees, monthly fees, and per-transaction fees, depending on the payment processor and the specific virtual terminal solution.

High-risk credit card processing refers to the handling of credit card transactions for businesses that are considered high risk by payment processors and financial institutions. These businesses typically operate in industries that have a higher likelihood of chargebacks, fraud, legal or regulatory issues, or financial instability. Due to the increased risks associated with these industries, high-risk merchants often face challenges in securing payment processing services and may be subject to higher fees, stricter underwriting requirements, or additional financial scrutiny.

Examples of business types that are often considered high risk include:

1) Adult entertainment:

Businesses in the adult entertainment industry, such as online adult content websites, adult toy stores, or strip clubs, are often considered high risk due to the controversial nature of their products or services and a higher likelihood of chargebacks.

2) Gambling and gaming:

Online gambling, sports betting, and gaming websites are typically considered high risk due to the potential for fraud, legal restrictions, and a higher rate of chargebacks.

3) Travel and hospitality:

Travel agencies, airlines, cruise lines, and vacation rental companies are often classified as high risk due to the potential for cancellations, chargebacks, and the impact of external factors such as economic downturns or global events on the industry.

4) E-cigarettes and vaping:

The e-cigarette and vaping industry faces regulatory challenges and scrutiny, making these businesses high risk for payment processors.

5) Nutraceuticals and supplements:

Businesses selling dietary supplements, vitamins, and nutraceutical products can be considered high risk due to the potential for regulatory issues, false claims, or product liability concerns.

6) Telemarketing and direct sales:

Telemarketing companies and businesses operating under a direct sales or multi-level marketing (MLM) model are often considered high risk due to the potential for fraud, high chargeback rates, and customer disputes.

7) Debt collection and credit repair:

Debt collection agencies and credit repair services face increased scrutiny and regulatory challenges, which can lead to their classification as high-risk businesses.

8) Cryptocurrency and digital goods:

Businesses dealing with cryptocurrency exchanges, digital goods, or other emerging technologies may be considered high risk due to the lack of clear regulations, potential for fraud, and the volatile nature of these industries.

This is not an exhaustive list, and other business types may also be considered high risk by payment processors. High-risk businesses often need to work with specialized high-risk merchant service providers to secure payment processing services and should be prepared for the potential challenges and costs associated with operating in a high-risk industry.

A cash discount program is an innovative method that allows you, as a merchant, to offer your customers a discount on their purchases if they choose to pay with cash or check, instead of using a credit or debit card. By encouraging customers to use cash or check, you can significantly reduce the overall cost of processing credit card transactions and keep more of your hard-earned revenue.

Here's how our cash discount program works:

1) Display clear signage:

We'll provide you with signage to display in your store or online, informing customers about the cash discount. This way, your customers will be aware that they can save money by opting for cash or check payments.

2) Adjust pricing:

You can incorporate the cost of credit card processing fees into your regular prices. This means that customers who choose to pay with a credit card will pay the listed price, while those who pay with cash or check will receive a discount.

3) Easy implementation:

Our cash discount program is simple to set up and integrate into your existing payment system. We'll guide you through the process and provide ongoing support to ensure everything runs smoothly.

4) Compliance:

Our program is designed to comply with all relevant regulations and card network rules, ensuring that you can offer a cash discount to your customers without any legal concerns. We will organize registering your business with the card issuers so that you can focus on what is most important, running your business.

By implementing our cash discount program, you'll enjoy the following benefits:

1) Lower processing fees:

By encouraging more customers to pay with cash or check, you'll reduce the number of credit card transactions, which in turn will lower your processing costs.

2) Improved cash flow:

With more customers paying in cash, you'll have immediate access to funds, reducing potential cash flow issues.

3) Transparent pricing:

Your customers will appreciate the transparency of a cash discount program, as they'll clearly see the savings they can make by choosing to pay with cash.

4) Financial Benefit:

Elevated Payment Solutions has saved clients enough to pay for the salaries of up to two employees since the program has rolled out over 5 years ago.

We're confident that our cash discount program can help you save on processing fees and enhance your business's financial health. If you're interested in learning more or getting started, please don't hesitate to contact us. We'll be happy to assist you in implementing a cash discount program tailored to your specific needs.

Cash discount and surcharging are two distinct methods used by businesses to offset credit card processing fees. Cash discount refers to offering customers a discount on the listed price when they pay with cash or check instead of credit cards, encouraging cash transactions and reducing processing costs for the business. On the other hand, surcharging involves adding an extra fee to credit card transactions, typically a percentage of the purchase amount, to cover the processing fees charged by the credit card companies. Both methods help businesses minimize the impact of processing fees, but cash discount rewards customers for using cash, while surcharging passes the processing costs directly to customers using credit cards.

Surcharging for credit card transactions is subject to specific regulations and restrictions, which vary depending on the card network and location. In some U.S. states, surcharging is prohibited by law, making it an illegal practice. Additionally, card networks such as Visa, Mastercard, Discover, and American Express have their own rules and guidelines governing surcharging, which businesses must strictly follow to avoid penalties or losing the ability to accept credit card payments.

As a result, many businesses opt for cash discount programs instead, which are widely permitted and considered a more customer-friendly approach. Offering cash discounts incentivizes customers to pay with cash or check by providing them with a discount on the listed price, effectively reducing processing costs without imposing additional fees. This approach is generally more acceptable to customers and compliant with most regulations, making it a preferred method for businesses to offset credit card processing fees.

While some businesses can successfully implement a credit card surcharge, there are several factors that may hinder its success or make it less appealing:

1) Legal restrictions:

Surcharging is prohibited in Many U.S. states, making it illegal for businesses in those jurisdictions to implement such a program.

2) Card network rules:

Major credit card networks (Visa, Mastercard, Discover, and American Express) have their own guidelines and requirements for surcharging. Non-compliance with these rules may result in penalties or loss of credit card acceptance privileges in perpituity.

3) Consumer perception:

Customers may view surcharging negatively, as it adds extra fees to their transactions, potentially leading to dissatisfaction and loss of business.

4) Administrative burden:

Implementing a surcharge program requires careful management to ensure compliance with regulations and card network rules, which may involve additional administrative tasks and additional detailed accounting costs.

These challenges may make it difficult for a business to successfully implement a credit card surcharge program, leading them to consider alternative methods to recuperate processing fees such as the Cash Discount program.

The Match List, also known as the Terminated Merchant File (TMF) or the Member Alert to Control High-Risk Merchants (MATCH) system, is a database maintained by Mastercard. It contains information about businesses and their owners who have had their merchant accounts terminated for various reasons, such as excessive chargebacks, fraud, violations of card network rules, or illegal activities.

Merchant service providers, such as banks and payment processors, use the MATCH list as a reference to screen potential clients when they apply for a new merchant account. Being listed on the MATCH system can make it difficult for businesses to obtain a new merchant account, as many providers are hesitant to work with high-risk merchants or those with a history of issues.

If a business or its owner is on the MATCH list, they will need to resolve the underlying issues that led to the termination of their previous merchant account and demonstrate compliance with card network rules before they can be removed from the list and be considered for a new merchant account.

A PCI QIR, or Payment Card Industry Qualified Integrator and Reseller, is a professional or organization that has been certified by the Payment Card Industry Security Standards Council (PCI SSC) to implement, configure, and/or support payment systems and applications in a manner that is compliant with the PCI Data Security Standard (PCI DSS).

The PCI QIR program was established to ensure that payment system integrators and resellers have the knowledge and expertise necessary to maintain the security of cardholder data and minimize the risk of data breaches. This is especially important for small-to-medium-sized merchants who often rely on third-party providers for their payment processing needs.

To become a PCI QIR, an individual or organization must:

1) Complete a comprehensive training program offered by the PCI SSC, which covers PCI DSS requirements, secure installation, and maintenance of payment applications.

2) Pass an examination that demonstrates their understanding of the PCI DSS requirements and best practices for secure payment processing.

3) Maintain their certification by meeting the PCI SSC's ongoing requirements, such as completing annual revalidation and staying up-to-date with any changes to the PCI DSS.

Merchants can benefit from working with a PCI QIR, as they can have greater confidence in the security and compliance of their payment systems, knowing that they are being implemented and maintained by a qualified professional.

Level 2 and Level 3 credit card processing refer to different types of data required for processing transactions, primarily for business-to-business (B2B) and business-to-government (B2G) purchases. These enhanced data levels provide additional information beyond the basic Level 1 data (such as the card number, expiration date, and transaction amount) to facilitate more detailed reporting, better expense management, and improved security.

Level 2 Processing:

Level 2 processing adds supplementary information to the transaction, which is typically required for corporate or commercial card transactions. Examples of Level 2 data include:

1) Merchant name and location

2) Sales tax amount

3) Customer code or purchase order number

4) Invoice number

5) Tax identification number

6) Tax amount

Level 3 Processing:

Level 3 processing involves even more detailed data, usually for larger corporate, government, or purchasing card transactions.

Level 3 data often includes:

1) All Level 1 and Level 2 data

2) Item product code

3) Item description

4) Item quantity

5) Item unit of measure

6) Extended item amount (quantity x unit cost)

7) Freight amount

8) Duty amount

9) Line item discount

Level 2 and Level 3 processing are beneficial for businesses because they can result in lower interchange rates, better expense tracking, and improved transaction security. However, not all payment processors support Level 2 and Level 3 processing, and additional software or hardware may be required to facilitate these transactions.

The Durbin Amendment is a provision within the Dodd-Frank Wall Street Reform and Consumer Protection Act, a major financial reform legislation enacted in the United States in response to the 2008 financial crisis. The Durbin Amendment, named after its sponsor Senator Richard Durbin, was included in the Act to address the issue of interchange fees, which are the fees that merchants pay to banks and card issuers for processing debit card transactions.

Before the Durbin Amendment, interchange fees were unregulated and often criticized for being excessive, disadvantaging small businesses, and increasing costs for consumers. The Durbin Amendment aimed to address these concerns by:

1) Capping the amount that banks and card issuers with $10 billion or more in assets could charge merchants for processing debit card transactions. The Federal Reserve, as a result, established a cap of 21 cents plus 0.05% of the transaction amount, with an additional one-cent fraud prevention adjustment allowed under certain conditions.

2) Prohibiting exclusivity agreements between payment card networks and debit card issuers, which means that issuers are required to offer at least two unaffiliated payment networks for routing transactions. This requirement aims to increase competition among payment networks and potentially lower costs for merchants.

The Durbin Amendment has been a subject of debate since its implementation. Proponents argue that it has helped to lower interchange fees and increase competition, while critics claim that it has led to higher banking fees for consumers, reduced free checking options, and limited the growth of smaller banks and credit unions.

Credit card processing fees can be quite complex, as they encompass a range of different charges levied by various entities involved in the transaction process. Because of this, it can be a huge hinderance to the level of savings that could be provided to potential clients when a side-by-side proposal is not presented based on current processing numbers.

Here are some of the most common fees associated with credit card processing:

1) Card Type interchange:

Each and every single card has a hard cost to accept. Often times, the hard cost is different per card. The hard costs for all cards can be found on the card issuers interchange guide (see “what is interchange” on our Industry information tab) These card costs typically include a percentage of a transaction and a transaction fee per transaction. For Example, for a $100 transaction on a Regulated Visa CPS/retail Debit card(One of the most common types of debit card Used) as of 4/23/2023, the hard cost to accept that card is 0.005% and $0.21 so the hard cost would be $0.71. SOME PROCESSORS HIDE EXTRA FEES IN TRANSACTION HARD COST. At Elevated Payment Solutions, We do not.

2) Card Type Markup:

Every credit card processing ISO(independent sales office) and processing partners with those ISO’s negotiate markup or “buy rates” that they have to sell in order to provide profit for their respective offices. There is than typically a split of profit. For Example, if a companies buy rates are .005% and $0.05, a company would have to write the markup rates at those fees. As listed above, the cost of the transaction then increases from $0.71 to a new cost to include your markup (which is $0.55) to $1.76. The markup is typically transparent and it is hard to hide extra markup in these fees however, some processors are NOT TRANSPARENT with their markup and remove it altogether in effort to not provide the rates they are providing.

3) AVS and other transaction type fees:

All of the card issuing brands have very small fees that can be included in your card acceptance. Typically, for every $100 it equates out to $0.03 however some processors do hide additional markup in these fees. Your card acceptance for this $100 transaction just cost you $1.79 not to include additional hidden markup.

4) Monthly (and annual) Fees:

ISO(independent sales offices) and processing partners typically have hard cost on monthly and/or annual fees as well. These hard costs can typically include some of the following items such as a statement fee’s, PCI enrollment fees, PCI non-compliance fees, wireless fees, program fees, equipment lease fees, equipment rental fees, account service charges, online reporting fees and the list can go on and on. The main challenge with these fees is that oftentimes, there is ridiculous markup in these items that processing companies charge. Some of the fees however, like PCI annual enrollment(oftentimes broken up into monthly installments and different from non-compliance fees) and statement or service charges are industry standard and should not be looked at as out of the ordinary unless those fees are an extravagant amount.

5) Equipment leasing and rental:

Some of the most expensive and scandalous ways for processors to take advantage of a new client is to have the client rent or lease equipment at a high monthly rate. Sometimes these processors use the excuse of “it will be covered under warranty” but clients are still heavily taken advantage of. On a typical equipment lease, The Merchant signs a 3 year agreement term at $49.95 per month totaling out to $1,798.20. The equipment’s hard cost for a processor or a client if sourced offline is on average $250 leaving a difference of $1,548.20 after everything is said and done. This is an egregious issue that Elevated Payment Solutions has been combating wholeheartedly. Equipment rental has been seen as high at $89 per month for the same typical equipment that only costs $250 to purchase.

This is NOT all fees that can be included in any given merchant statement but just an example of the most common. Other fees can include Assessment fees, Processor or acquirer fees, gateway fees, monthly minimums, Early termination or forced termination, chargebacks and chargeback fees, Network access fees, batch fees, address verification fees, customer service charges(yes when merchants call the 1-800 number), and more.

So please try to consider all of this when you ask “What’s your rate” and Let Elevated Payment solutions make sure that you are getting a fair deal by providing a side by side proposal for your business.