The payment processing fee is the fee you incur every time you buy or order something from a store using your credit card. This is not optional since the players facilitating and processing your payments need to pay for their services. There are usually three parties involved in this process:

• The acquiring bank
• The issuing bank
• The credit card companies

The payment processing fee is not the same for every transaction, whether online or offline. Payment processing fees are not the same for everyone and every transaction. Certain factors affect the amount of payment processing fee you get charged. 

The amount of payment processing fee that merchants have to pay depends upon the following factors:

• Interchange rate

The interchange rate refers to the amount of money a credit card company cuts from a receiving bank every time the bank receives payments through the credit card. It helps the issuing bank in covering its handling costs. It also minimizes the risks associated with approving sales and other fraudulent transactions. 

However, the interchange rate is not the same for all card issuers. Some companies cost more while others cost less. Each network has its own policy. Apart from that, there are other elements as well that may affect the interchange rate, such as:

• The type of card
• Method of accepting payments, such as swipe, online, or typing into a terminal.
• The risk level of the merchant’s business

• Merchant account provider fee

There must always be a link between credit card networks and merchant accounts. Without that, payments via credit cards cannot be processed. Companies accept payments via credit cards from merchant accounts, and the payments are deposited in the merchant’s bank account regularly. 

This leads to an additional cost other than the interchange fee. The merchant account provider cuts a small percentage on every transaction, depending on the type of business and the amount of transaction. There is also a monthly maintenance fee in addition to the per-transaction fee. 

• The way the card is processed

Both the interchange rate and the merchant account provider fee depend upon how the card is processed. There are many ways in which a transaction can happen, such as:

• By swiping card
• Over-the-phone transactions
• Online transactions

Every single one of these transaction types has its own risks associated with it. The less risky a transaction is, such as swiping a card at a terminal, the lower are the interchange charges and merchant fees. 

Conclusion

In order to benefit from the services of online and offline transactions via credit and debit cards, you have to pay the processing fees. However, if you play smart, you can reduce these fees. 

Avail the services of companies like nordex solutions, dedicated solely to the purpose of helping people reduce their payment processing fees.