How much do merchants pay to accept credit cards?

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The discount rate is one of the processing fees charged to your merchant account. There are various fees associated with having a merchant account. These could vary, depending on the type and company providing the service, but all merchant accounts have 2 main costs:

  • Discount Rates: With most merchant service providers, every processed sale is classified into 1 of 3 qualification levels (Qualified, Mid-Qualified, & Non-Qualified), and is charged a discounted percentage rate associated with that qualification. Each sales level and rate is determined by the type of card used, and/or how it is accepted and processed.
  • Transaction or Authorization Fee: This fee is charged for each electronic authorization request and transaction made, including all approved and declined sales, returns, voids, and batch settlements.

The discount rate is simply, a percentage charged on each transaction. It is usually lower if you are swiping cards, and higher if you are keying them in or taking Internet transactions. For example, if you are setup with a discount rate of 2.5%, and you charge a customer $100, the discount fee would be $2.50.

The per transaction fee is the fee charged by the processor to process each transaction. This fee is charged on every transaction, regardless of whether or not the transaction is approved or declined. It is charged on Visa, MasterCard, Amex, and Discover cards. Common transaction fees are 20 cents for swiped and 30 cents for not swiping (keying). Transaction fees can be slightly higher for wireless transactions.

A monthly minimum fee is not an extra fee but rather a minimum amount that the processor or merchant account provider needs to have in fees. However, if your monthly fees are less than this minimum, then you are charged the difference up to the minimum. For example, if you have $20 in fees in a given month, and your account has a $25 monthly minimum on it, you will be charged an additional $5 to meet the monthly minimum.

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