Controlling Your Cost for Accepting Credit Cards

The FPN client support team routinely receives calls about the fees associated with accepting credit cards and asks what can be done to keep the cost to a minimum. Here is a simple explanation about the fees you pay and how to minimize your cost.

There are three components that make up your cost: Interchange, Assessments and Processor Cost.

Interchange is the fee you will pay for an authorization and settlement of a transaction (moving money from the cardholder to your bank account). Interchange is the most costly fee associated with credit card acceptance. This portion of the fee goes directly back to the bank that issued the card and will vary based on card type (debit, credit, rewards, signature, commercial, business, world t&e, etc.).

Assessments is the fee paid to the card brands, Visa, MasterCard, Discover, American Express. The money collected from the fee goes directly to the card brand. Did you ever wonder how they sponsor so many sporting events?

The Processor Cost is the final component. This fee is approximately 15-18% of your card cost. The fee covers the cost of support, risk, and underwriting the merchant account.

Your franchise has negotiated the one component they could in the process to help provide you with the most effective program available.

In the next article you will have a chance to learn about how to keep your card costs to a minimum.