Whether you’re buying a card machine or using a mobile point of sale (mPOS) payment facilitator like Square, it’s important to understand the fees and costs that come with credit card processing. There are several different types of fees that may apply, depending on your business type and transaction volumes. Some of these include PCI compliance fees, annual account fees, and monthly service fees that can be charged for software and hardware usage.
Swipe fees are a part of your total cost to accept credit cards. These are imposed by the payment processors and card issuers to cover the risk of fraud on each swiped or chipped transaction. They also help to offset the time it takes for the money to be deposited into your account after each sale. For many small businesses, these fees can add up to a significant percentage of their revenue.
It’s important to compare the pricing of different card machines to find the best deals. You’ll want to look for the lowest swipe fee rates possible and consider how much you’ll be paying in additional fees per month and year. It’s important to do your research before making a purchase, as some merchants may try to charge hidden fees or stow away additional charges in fine print.
The fees that are associated with a swiped or chipped transaction can vary between payment processors, but they generally fall into one of three categories: Interchange fees: These are payments made to the credit card companies for each swiped or chipped transaction. They are calculated on a variety of factors, including the type of card used, the amount of the transaction, and the industry of the business. Interchange fees are typically lower for domestic debit and credit cards, and higher for premium cards like American Express or those issued in other countries.
A percentage of the swipe fee is also paid to the card network, which helps to cover their operational expenses. This is often called an assessment or network fee and can range from a few cents to a couple of dollars per transaction.
Finally, a portion of the swipe fee goes to your payment processor for their role in facilitating the transaction. These fees can be a flat per-transaction rate, a percentage of the transaction value, or a combination of both. Some processors will also charge additional fees for services like customer support, chargeback handling, and more.
When looking at the price of a card machine, you should always consider these fees in addition to the overall cost to operate your business. Purchasing a cheap credit card machine from an online retailer can seem to save you money, but these devices are frequently incompatible with the payment processing software and networks of the company that sells them, meaning they will end up costing you more in the long run due to reprogramming, downloads, and support costs. It’s also essential to carefully read contracts before signing, as some can tack on extra fees that are difficult or impossible to cancel later on.
