Hidden Fees in Credit Card Processing Services

Online Payments - Credit Card Processing | FTNIIf you accept credit cards, you work with a processing service to ensure that the consumer or client’s account is charged and that you receive your payment. It seems like a pretty straightforward process, but there are four parties involved with the credit card transaction. Understanding how credit card processing services work and how you can save money is important.

Four Parties

The four parties involved in credit card processing services include the merchant that receives the payment, the merchant’s bank that is used for processing the payment, the issuing bank that provided the credit card to the customer, and the customer.

As the merchant, you make contact with the client who buys your product. You may offer a variety of ways to accept payments including cash, check, debit cards, and credit cards.

Lending Money

The two banks in the credit card processing services part act as lenders in the transaction. The issuing bank effectively lends money to the customer who has about 30 days to make a payment. Consumers can avoid interest changes by paying their bills in full each month.

The merchant’s bank pays the merchant for the purchased item minus a fee. Also, the issuing bank charges a fee, which the merchant pays. This further reduces what the merchant makes on the transaction.

Fees Charged

Credit card processing services include the two fees mentioned earlier. The issuing bank’s fee is known as the interchange fee, and the acquiring bank’s fee is called the discount rate. Notwithstanding the discount rate, other fees may also be charged.

Both fees are assessed as a percentage of the transaction. Some banks also charge a small fee on top of that cost. So, your cost might be 2.9 percent plus 30 cents per transaction. Essentially, the added fee ensures that a base amount is collected. Notably, if a card is present at a transaction, the fee is lower than when the card is not present as in telephone or online orders.

Type of Business

The type of business you run can also affect your interchange rates. For instance, a Passenger Transport company may be charged 1.75 percent and have an added 10 cent per transaction fee from MasterCard. That same MasterCard may charge as little as 1.35 percent for certain convenience purchases or as much as 2.00 percent for a charity.

Before you complete your part of the credit card processing services you should determine how your business is categorized. You should understand that you will pay more if transactions are conducted over the phone or online.

Credit Card Processing Services

You will always find yourself dealing with an acquiring bank that is composed of two parts—a merchant service provider and the processing company. The merchant service provider deals directly with you and is your contact liaison in the process. The processing company transmits the sales’ information between the banks and the merchant. This is where the transaction is scrutinized and approved and where the payment process started.

Saving Money

Clearly, it pays to shop around when seeking credit card processing services. The type and amount of fees vary. If you take over $1 million in transactions per year, those fees can quickly add up. So if you compare costs between providers, you stand to save thousands of dollars per year.


FTNI is strategically aligned with credit card industry leaders to provide you with the best credit card processing services possible. FTNI is a Visa certified vendor, and our platform is connected to all major gateways including Chase Paymentech, First Data, TSYS and Vantiv. If you have an existing merchant relationship that you are happy with, you can continue using them. If you don’t, then you can use FTNI’s network of providers. Read more about how FTNI can help you simplify credit card processing or contact us today to find out more. Contact Us

Topics: credit card processing