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Payment processing fees are made up of a combination of three separate charges: interchange, assessments and payment processing fees. This overview will help you understand these fees:

Interchange fees

The Interchange fee is a fee that a merchant’s acquiring bank pays to the card issuing bank. The rate varies based on the type of business (low, medium, high risk), the card being used, the method used to process it, and other factors. The Interchange is set by the card networks and isn’t something negotiated between the processor and merchant.

Card-present transactions: Card-present transactions benefit from the transaction being processed by certified payment acceptance equipment and can be vetted in a variety of ways during person-to-person transactions. They are generally assessed at a lower rate because it’s typically a more trustworthy transaction.

Card-not-present transactions: Card-not-present transactions typically suffer from higher rates of fraud. Industries with a higher rates/likelihood of fraud or disputed transactions tend to pay more to process transactions to cover the potential financial losses the issuing bank could face.

The size and volume of a merchants average ticket also impacts the interchange rate. Businesses with larger ticket amounts tend to see higher interchange rates. High-volume, low-ticket merchants generally pay lower fees at a higher percentage, whereas high-ticket, low-volume merchants may pay lower percentage fees and higher per ticket fees.

Assessment fees

Assessments are fees that go to the card schemes (eg Visa or Mastercard). They are a flat amount and pay for the network infrastructure that makes card payments possible. Assessments help with maintenance of rules related to card acceptance.

Payment processing fees

In addition to collecting interchange and assessment fees for distribution, payment processors like ourselves offer substantial value enhancements and incur their own operating costs. These are passed on to merchants as payment processing fees.

Processor fees ultimately support the software, equipment and professional services that make efficient payment processing possible: our 24/7 customer support and much more.

Processors that offer value on top of the basic payment authorization function are differentiated by services that can benefit your business:

• Accepting new and local payment methods most suited to your customers requirements.
• Payment security to help prevent data breaches and minimize fraud - our average approval rates today sit above 85% whilst our chargeback levels as this entry is written stand at 0.0008% (both especially strong results for our sectors).
• 24/7 for customer support so we’re always on hand for any of your needs.
• Easy-to-use reporting and analytics that offer actionable insights – daily reports have enabled us to increase our merchant’s throughput by at least 6.5-8.5% in just the space of one integration.

Payment processing fees are an essential cost for businesses that accept electronic payments, but it is important to understand the different types of fees and how they are calculated. By understanding payment processing fees, businesses can make informed decisions about which payment processors to use and how to negotiate more favourable terms.