The very first thing you should know about credit card processing fees is that there are no standard fees across all cards or for all vendors. Some companies will not disclose what their “standard” transaction fee is, so it is impossible to compare one company's fees with another.
Some major banks and credit unions have special membership programs where they include free or heavily discounted merchant services, but this only applies to certain types of merchants (mostly e-commerce sites) and usually limited to a specific number of transactions per month.
There are also many third party apps and tools that can help lower your payment processing costs, such as Credit Card Tracker and BillMatrix. These applications make paying online sellers more convenient by acting as both a shopping cart and payer solution. Both Apps typically cost around $10 per year.
This article will discuss some common pitfalls when buying items online and how to avoid them, save money, and find the best quality merchandise. But before we get into those, let us look at the most expensive way to buy something new!
The largest credit card processor in America has an annual revenue of over $2 billion dollars, and they charge a whopping 2% + $0.10 per swipe to process payments! That equals almost $20 PER TRANSACTION!
I believe most people would agree that spending 20 bucks on anything is too much, even if it is just for fun.
There are several different types of visa processing fees, some more expensive than others. Most people focus only on the larger upfront costs such as credit card acquisition but forget about the smaller ones, like authorization fees!
These small fees are paid when your bank verifies if an account exists for you or not before issuing a VISA in house credit card to you. This is usually done through either Direct Deposit or recurring monthly payments which have been set up already.
Both of these require that someone at your bank verify that there is an account for you, so this cost comes with its own little fee. These fees can add up quickly!
There is also another type of authorization fee that most people are never aware of. This is what we will discuss now.
The facility fees listed above are not the only things that VISA charges to process credit cards! There’s also an international transaction fee which is typically around 2% of the total purchase price of the item being purchased.
This can easily add up if you run a large business, or even just shopping online frequently! Luckily there’s something very easy you can do to avoid this extra cost — simply use another payment method!
There are so many great alternatives to paying with a VISA card that it’s not hard to find ones that don’t charge international transaction fees either. Some of the most popular include:
Google Pay – Google has made it super simple to pay using their app by letting you create accounts directly within the app. Not only does it work anywhere that accepts major debit and credit cards, but it doesn’t hit your bank account with international transaction fees!
– Google has made it super simple to pay using their app by letting you create accounts directly within the app. Not only does it work anywhere that accepts major debit and credit cards, but it doesn’t hit your bank account with international transaction fees! Apple Pay – This one may be slightly more expensive due to the small transaction fees that Apple levies, but overall it’s much better value than using a VISA card.
While some may think that the fees are high, they do not know how much of the total cost comes down to the business owner. The merchant’s account with VISA goes through an intermediary agency called a third-party processor.
This company bills VISA for the costs associated with doing business with you, including your credit card transaction fees. Some of these costs include a%ering facility, fraud detection, security systems, etc. All of this is in addition to the actual visa processing fee.
By having an outside vendor handle the payment process, VISA can avoid paying its own overhead costs such as rent or staff salaries.
Most credit cards have a yearly membership fee for using their logo as well as premium services they offer, such as fast card access.
This cost is usually referred to as the “Visa Processing” fee because it is only related to Visa. Some major banks also add another fee to cover their costs of having a merchant account. This is not limited to just Credit Cards, these fees exist for other forms of payment like Debit Card Transaction Fees.
As mentioned earlier, your credit card company typically has a per-transaction fees for doing business with them. These are referred to as visa processing fees. The average cost of these fees is around 1% of the total transaction amount!
That means if you spend $1,000 on a trip, the visa processing fee would be about one thousandths of a percent or roughly $10 extra.
This article will go into more detail on ways to lower your visa processing fees so that it is less than the average cost. But first, let’s look at some common reasons why your visa processing costs may be higher than normal.
Common Reasons For Higher Visas Fees
There are several factors that can contribute to high visa processing fees, sometimes significantly. Some of these reasons include:
Higher merchant service providers (MSPs) fees
Higher bank fees for international transfers
More expensive cards for merchants to accept
In this article, we will talk about how to control MSPS fees. We will also suggest using an external provider like PayPal or Stripe instead of paying directly through the bank.
Controlling Merchant Service Provider (MSP) Fees
Mostly all major banks offer their own payment services called merchant service providers (or MSPs). An MSP handles everything from taking care of financial transactions to managing online stores for your credit card.
There are several additional fees that vary depending on what kind of card you have, how many cards you process per day, your location, and whether or not you offer pre-approved credit for international travel clients.
Some examples of these additional costs include the below:
Transaction fees – These refer to the fees that Visa and/or MasterCard charge merchants for each transaction they process through their system. Some of the more common ones incure a flat rate per transaction while others can be volume based.
– These refer to the fees that Visa and/or MasterCard charge merchants for each transaction they process through their system. Some of the more common ones incure a flat rate per transaction while others can be volume based. Returned item fees – This is when a merchant cannot accept a returned product and thus has to refund money to you due to it being lost or destroyed during shipping. Most major retailers do not incur this cost as they have large enough margins to withstand the occasional bad apple.
– This is when a merchant cannot accept a returned product and thus has to refund money to you due to it being lost or destroyed during shipping. Most major retailers do not incur this cost as they have large enough margins to withstand the occasional bad apple. Security inspection fees – Many banks also have security departments that check both internal systems and external vendors to make sure everything is running properly. If there is an issue found, then and employee review may take place.
As mentioned before, there are many different vendors that offer VISA pre-paid cards to us consumers. These companies typically have large overhead costs for keeping their machines running and paying salaries for employees to process cards.
So how much is the overall cost of each card to them? That information is not available anywhere so we must do some math to figure it out!
The price per transaction of a VISA prepaid card is determined by two main factors: fees paid to VISA for credit card processing and the percentage fee charged by the individual company where the processing takes place.
The first one is easy, they pay a flat monthly fee to use VISA’s payment network. This includes things like the equipment used to do initial fraud checks as well as the software needed to run the system on a day-to-day basis.
The second one is slightly more tricky because what people call “Visa processing” actually consists of several different services at different vendor locations around the world. Some of these vendors may even be third party companies that work with VISA.
With this, the additional markup for the service becomes very important since those companies add onto the already expensive processing fee in their country.
There is some leeway in how long it takes to process your credit card statement, depending on what time of day you place an order. But for the most part, business hours are very expensive for visa processors!
Most major banks have their own internal systems that handle this. Some even outsource these services to other companies. This means there can be multiple levels of middlemen involved.
All of these factors add up to why businesses pay more for VISA processing than anyone should.