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Credit Card Processing Fees: A Guide for Small Business Owners

If you are a small business owner, you know that having the ability to accept credit card payments from your customers is important. Today’s consumers want to be able to use their credit cards for all their purchases, even low-dollar ones. Providing this convenience is a crucial factor in the success of your business (and may even help your customers spend more with you each time they visit). Like all conveniences, having the ability to accept credit cards comes with a cost.

What you need to know as a small business owner is that it is possible to control that cost quite effectively if you learn to avoid some common hidden fees that pervade the credit card processing business. Many credit card processors charge fees that may look insignificant at first, but add up like wildfire.

Use this guide to better understand the fees that credit card processors charge businesses like yours. This will help you choose a provider with transparent, streamlined pricing that takes less of a bite out of your bottom line.

Transaction Fees vs. Per-Transaction Fees

As you research fees for a point-of-sale credit card processing system, the first number you will encounter will be the basic transaction fee. A transaction fee is a percentage that pays for the interchange between all the parties involved in the transfer of money from one place to another: the card’s issuing bank, the credit card network (Visa, Mastercard, American Express), the payment processor, and ultimately, your bank when it deposits money into your account.

To give a hypothetical example, you might sign up with a credit card processing company that charages a 2.9% transaction fee. That would mean that every time a card is swiped, dipped, or tapped, 2.9% of the value of the entities will go to paying for all these interchanges of money. Of every $1000 you transact, you will pay $29 in fees.


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Many credit card processing companies, however, have per-transaction fees that can hit small businesses hard. Per-transaction charges sound deceptively tiny, ranging between 10 and 20 cents each. It’s a few cents, right? How bad can that be? Well, these types of fees are in essence a processing provider markup cost, and the effect of those markups can be deceptive.

How big an impact they have on your particular business depends on what your average transaction size is.Let’s say you’ve investigated the fine print and your credit card processor actually charges 2.9% transaction fee plus a $0.15 per-transaction fee. If you are a contractor who usually earns $1000 per transaction, you would incur a fairly reasonable transaction cost of $29.15 per $1000. Not bad. But if you are a donut shop owner whose average transaction size is $1.00, $1000 in credit card sales would cost you $179. That’s a sizable difference.

USA Credit Card Processing Costs Overview Comparison

You don’t have to be a math wizard to decide what the impact of having this kind of provider will be on your business. The smaller the size of your average transaction, the greater the impact it will have on your bottom line. Many small businesses (and especially sole proprietors) choose to avoid providers with per-transaction fees as a rule.

Monthly Fees

Subscription costs are another way that credit card processing costs can mount up for small business owners. Some credit card processors have monthly subscription fees as an additional form of markup. These can start small l and become more and more costly as your business grows. While you may be able to start out with a cheap or even free monthly plan initially, that plan could have monthly transaction or level-of-service limitations. Over time, you might find yourself up-leveling on the fly, ultimately wiggling your way into a premium service level that costs $100 per month.

When you choose a credit card processing provider, see what limitations lurk in the fine print, and ask yourself if they might become more significant as your business continues on its growth trajectory.

Statement Fees

Statement Fees are a unnecessary charge that exists only to take more money out of your pocket!

Statement Fees

Believe it or not, some credit card processors will charge you between $10 and $15 per month to send you statements of your credit card processing use. Even if that statement is sent electronically.

This one is a no-brainer. You shouldn’t have to pay for monthly statements. Again, make sure you puruse that fine print for hidden statement fees.

Software Costs

Unless your credit card processor has a free app associated with its credit card reader, there may be a cost associated with the platform that you and your customers interact with. These fees can be one-time set up fees, one-time software purchase fees, monthly subscription fees, ongoing fees for technical support, or a combination.

Monthly Minimums

Monthly minimums are thresholds credit card processing companies institute that are particularly troublesome for solopreneurs and seasonal businesses. If your sales fluctuate from month to month, you may find that you fulfill your minimum requirement only part of the time. But if a monthly minimum is in place, you will be charged at least that every month without fail.

Equipment Fees

With the sleek and elegant point-of-sale technologies available these days, it is worth thinking long and hard before investing in a costly terminal. Even the simplest of card readers can differ in price, and many of them come saddled with monthly subscription fees. Do your homework before you enter into any kind of agreement surrounding the lease of equipment. Minimal-cost mobile credit card that pair with smartphones and tablets are an increasingly popular alterative that small businesses are choosing.

The SumUp Air Lite Card Reader enables businesses to take credit, debit and contactless payments.

The SumUp Air Lite Card Reader enables businesses to take credit, debit and contactless payments.

Flat Fees: A Better Way for Small Businesses

By now you will agree that credit card processing fees can be somewhat of a jungle. The best way for small business owners to navigate through it—and protect their profit margins—is to use the simplest and most transparent system available.

There are astoundingly robust, lightweight, and easy-to-use mobile card reading technologies available that require minimal set-up costs and few extra charges. These are companies with fair, simple pricing and are an excellent choice for most small businesses. One such company, SumUp, offers the lowest overall cost on the market, with just $19 cost for the card reader itself and a 2.65% transaction fee – no additional fees whatsoever.

Credit card processing may be complicated, but with a little background knowledge of how fees work, choosing a provider with clear, low pricing can actually be quite simple. In fact, you can get started right now in less than five minutes.

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Catherine Traffis is blogging for SumUp | USA.

Catherine Traffis