What is a payment processing fee?
If your business accepts card payments from your customers, your provider will charge fees for handling your card transactions.
This is the amount your payment processing provider charges you for each card transaction your business makes. There are three main types of payment processing fees:
- Transactional fees
- Flat fees
- Incidental fees
Who are the key players?
Credit card associations: These are companies that create credit cards, like Visa, Mastercard and American Express. They’re sometimes called credit card networks.
Credit card issuing banks: Credit card issuing banks are banks like Chase, Citi, and Wells Fargo that issue cards to customers. Some card associations like Discover and American Express issue their own cards.
Credit card processors: Sometimes called acquiring banks or acquirers, these institutions act as the middleman between merchants and credit card associations. They pass funding information and authorisation requests along so that merchants can complete transactions.
Merchant account providers: These are companies that manage credit card processing for merchants, usually with the help of an acquirer.
Payment gateways: Used in e-commerce, these are online payment portals that send transactions from the merchant to the acquirer.