As a consumer, you may swipe that debit card at the terminal in the grocery store and not even think about what it costs the merchant to accept the card. But as a business owner you can't afford to ignore these fees. Credit card processors charge fees to cover the cost of processing debit and credit card transactions, and the types of fees that they charge varies widely, depending on the processor.
The percentage of each card transaction that the processor charges is the discount rate. These rates start at 1.6 percent. Processors may quote a low discount rate in order to secure your business, but may charge multiple tiered rates depending on the type of card that is processed. It may be difficult to know exactly what you will pay for a discount rate on any particular card, so get as much information as possible from your processor about its pricing structure. The discount rate may also be affected by your own credit rating.
Transaction fees are a flat fee that the processor charges you per transaction processed. These vary by company, with a range of 5 cents to 50 cents being common. Many companies will offer lower discount fees in exchange for higher transaction fees. If you process high individual transaction amounts, it may make sense to accept the higher transaction fees in exchange for a lower discount rate.
Your processor may charge a monthly fee that it may call a statement fee. This is a flat monthly fee that the processor adds to your bill each month. Some processors don't charge a monthly fee but require that your total processing fees meet a minimum amount each month, such as $5 or $10. If you don't meet that minimum, the processor will collect the difference. Some charge a monthly fee for a statement or for customer service as well.
Many processors charge a start-up fee for setting up your account that can vary widely and may also be negotiable. Most processors also lease terminals to process credit cards. Terminal leases can be expensive and often are negotiable, so check with the processor before you agree to a lease. You may be able to purchase a terminal and use it with your processor's system. The processor may also charge a higher rate for transactions that aren't swiped through a terminal. Some processors also charge for address verification services that prevent fraud.