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Per Transaction Charge in the Credit Card Processing Industry

When running a business and looking for a credit card processing service, many business owners make the mistake of focusing on processing rates instead of per transaction fees. These are the two main types of fees that credit card processing services charge, and there is a reason why both are applied to purchases.

The processing rate is a single percentage that the card processing service makes off of the total volume of a transaction. The per transaction fee is a flat rate that is charged every time a transaction is completed. This often ends up costing more than the actual processing rate, especially for merchant accounts that have a low sale amount per transaction. So why are there per transaction charges in the card processing industry? This is how card processing services make most of their money.

It is important to understand that the per transaction fee is widely misunderstood. When people think of per transaction fees, they picture the flat fee they are charged every time company uses that service to run a transaction. Return fees, authorization transaction  fees and even AVS fees are other examples of per transaction fees.

It would be unfair for processing services to charge a flat rate for their service since some business process credit cards less frequently than others. It is simply a better business practice for the processing service to charge on a per transaction basis.

When using the same provider, every business pays the same in per transaction fees. It doesn’t matter if the merchant accounts are national chains or mom-and-pop stores. Every company that takes credit cards as a form of payment is hit with the per transaction charge, and the amount of this charge stays the same no matter what.

For example, a customer may walk into a chain shopping center and leave with a dinning room table. At a local store, the customer may buy a pack of gum. Despite the total of each purchase, both stores are charged the same per transaction fee. So, when companies are looking for a credit card processing service, they should focus a little less on the processing rate and more on the per transaction fee that the service charges.


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