As a business owner, understanding how different payment methods impact your credit card processing fees is crucial for managing costs effectively.
The type of payment your customers use—whether it's a credit card, debit card, or digital wallet—can significantly influence the fees you pay. Here’s a breakdown of how various payment methods affect your processing fees.
Credit Cards
Credit card transactions are generally more expensive to process than debit cards. This is because credit card companies charge interchange fees, which are higher for credit transactions.
The type of credit card also matters: rewards cards, corporate cards, and premium cards often come with higher fees due to the benefits they offer cardholders. Additionally, transactions where the card is not physically present, such as online payments, typically incur higher fees due to increased risk.
Debit Cards
Debit card transactions usually carry lower processing fees compared to credit cards. This is because debit transactions are considered less risky since the funds are directly withdrawn from the customer’s bank account.
However, the fees can vary depending on whether the transaction is processed as a PIN-based debit or a signature-based debit. PIN-based transactions tend to have lower fees because they are more secure.
Digital Wallets
Payments made through digital wallets, such as Apple Pay or Google Pay, are becoming increasingly popular. These transactions are generally processed as card-not-present transactions, which can result in slightly higher fees similar to those of online credit card payments. However, digital wallets offer enhanced security features, which can sometimes lead to lower fraud-related costs.
ACH Payments
Automated Clearing House (ACH) payments are another option that can significantly reduce processing fees. These direct bank transfers bypass credit card networks, resulting in lower fees. ACH payments are ideal for recurring payments or large transactions where minimizing fees is essential.
Overwhelmed by Credit Card Processing Fees?
We can help! There are many ways to reduce or even eliminate monthly fees without having to change how you serve your customers. Give us a call and we can take a look at your setup and formulate a plan that helps you save.
