Processing credit card transactions for your online business involves overcoming numerous obstacles. You must maintain good records, provide solid customer service and be prepared to deal with the challenges posed by fraud, theft and chargebacks. You must also be able to understand your payment processing fees. Understand payment processing fees in general and the difference between credit card fees and credit card brand fees is crucial. When accepting payments, let the experts at SecureGlobalPay guide you down a path towards success.
Chargebacks represent one of the many obstacles to being a “good merchant”. Another is the occasional challenges posed by the different credit card brand fees charged by the brands themselves, payment processors and acquiring banks.
Like it or not, credit card companies do not act in unison. Each one is a business unto itself, competing with others to gain market share and attract customers. As such, each credit card company will approach business a little differently. And, in addition to each credit card company, merchants must deal with the fees imposed by credit card associations.
Credit Card Associations
It is worth understanding what credit card associations are and how they function.
A credit card association acts as a financial service organization for the credit card it services. For example, the credit card association governing Visa will make rules for how that specific brand of card conducts the following operations:
- how cards are approved and issued
- how customers are charged
- how payments are accepted
- how the card company takes measures to prevent fraud
These card associations provide industry oversight and guidance to credit card companies. In the financial world, this is an important role that is classified as a service. As such, credit card associations charge fees for each card transaction.
Businesses with merchant accounts will be called upon to pay credit card association fees in addition to regular payment processing fees (e.g. minimum payment, cash advance fee or returned payment fee). This is part of the cost of doing business in the internet age. These fees may be called card association fees, assessment fees or card brand fees.
The Fee Burden to Card Companies
It is worth a merchant’s time to understand some of the more common payment processing fees burdens faced by credit card companies. Some of these are passed along to merchants as part of the wholesale cost of card processing.
In addition to their issuing banks, credit card companies must also deal with their respective associations. Both impose fee burdens upon credit card companies.
Be alert for two different types of fees:
- Interchange fees are paid by credit card companies to the issuing bank
- Assessment fees are paid by card companies to credit card associations
The credit card industry as a whole has set established amounts for credit card fees across the industry. Not so for card brand fees.
Credit Card Association Fees
Because merchants end up on the hook for the more nebulous ‘card association fees’ as well as the basic card fees themselves, it is worth understanding why credit card association fees are difficult to find or calculate.
- Lack of visibility. Credit card association fees are not listed on credit card company websites.
- Lack of answers. Credit card companies do not disclose credit card association fees. Inquiries about association fees will be directed back to the merchant’s Merchant Service Provider (MSP).
- Stacked fees. Multiple fees can apply to a single transaction. For example, foreign-based credit cards may receive separate international surcharges in addition to regular card fees.
- Changing fees. Card association fees usually change over time. Fees can be eliminated, combined or new ones introduced.
- Naming convention. The same fee can be referred to by different names or abbreviations. Similarly, they can be combined under different abbreviations
- Combined fees. Different association fees can be combined into a single item on your invoice.
- Separated line items. Card association fees are usually not grouped together on an invoice. They can often be found spread out as separate line items on your statement.
- Fee size. Because these fees tend to be small in size, they are often overlooked as inconsequential.
Tracking Assessment Fees
Merchants can take steps to mitigate the effects of assessment fees. Some are listed below.
- Charges. Be aware that assessment fees are rarely uniformly applied across cards or industries. You may only get charged some of the fees depending on your pricing model, your transactions and your MSP’s billing plan. Assessment charges are often folded into your account fee.
- Fee listing. You should be able to obtain a list of assessment fees from your merchant account provider. Ask for a list with specific names and abbreviations they are using.
- Confirm fees. Utilize a neutral, secondary source to confirm fee amounts. See our sample fee schedules, below.
- Keep track. Start keeping a list of card brand fees you see on your own statements. This will enable you to keep track of changing terms/abbreviations and give you a source of data for confirming fee listings.
- Be aware of the increase. Fees should not change without prior notification. Keep an eye on your MSP bills for unexpected, pass-through charges.
- Fee amounts. It is often easier to keep track of these charges by recognizing their fee amounts. Learn to recognize specific charge amounts and the transactions to which they are applied.
- Be suspicious. Routinely check your statement or changes in fee names, structure and amounts.
- Fee changes. Be on the lookout for fee change notifications. October and April are the most common transition months where fee changes are concerned.
- Understand the terms. When you sign your agreement, ask about card brand fees. Be prepared to go up the chain for answers as not all service reps are versed in brand fee structure.
Fee Reference List
Listed below are the fees most commonly associated with major credit card brands. Be advised the charges on this list are provisional and subject to change.
- 0.14% – credit assessment fee
- 0.13% – debit assessment
- 1.00% – international service assessment
- 1.40% – international service assessment/foreign transaction fees
- $0.0195 – acquirer processing fee, credit
- $0.0155 – acquirer processing fee, debit
- $0.0195 – credit voucher fee, credit
- $0.0155 – credit voucher fee, debit
- $0.0018 – system file transmission fee
- $0.10 – transaction integrity fee
- $0.09 – misuse of authorization fee
- $0.20 – zero limit floor fee
- $0.025 – zero dollar verification fee
- $1.00 – dispute image fee
Other fees, such as a variable Fixed Acquirer Network Fee (FANF) or a flat fee for charge disputes are also common.
- 0.13% – assessment/acquirer brand volume fee
- 0.01% – assessment/acquirer brand volume fee >$1,000
- 0.0075% – acquirer license fee/license volume fee
- 0.60% – international cross-border assessment fee (domestic)
- 1.00% – international cross-border assessment fee (foreign)
- 0.01% – digital enablement fee
- 1.57% – global wholesale travel transaction
- $0.0195 – network access brand usage fee
- $0.01 – AVS fee (card present)
- $0.005 – AVS fee (card not present)
- $0.025 – account status inquiry fee (intraregional)
- $0.03 – secure code transaction fee
- $0.045 – variable processing excellence fee (+/- .60)
- $0.012 – processing integrity fee detail
- $1.25 per month/per location – merchant location fee
- $500 – yearly registration fee
- $1.35 – dispute case fee
- 0.13% – assessment
- 0.55% – international processing fees
- 0.80% – international service fee
- $0.0195 – data usage fee
- $0.025 – network authorization fee
- 0.15% – assessment fees
- 0.40% – international assessment/inbound fee
- 0.30% – card not present surcharge
- 0.75% – tech specification non-compliance fee
In conclusion, the simple fact is that card association fees are simply a fact of life when doing business with major credit card companies.
Although new business models are emerging that will change how card association fees are handled. But until those changes are introduced, being aware of and keeping track of those charges is essential to running an effective business.
Thinking of establishing an online merchant account? Are you shopping rates? Do you need assistance integrating your secure payment gateway. Let SecureGlobalPay show you how to do it right the first time around. Give us a call, we are always here to help any way we can.