What do merchants have to pay for credit cards?

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fffresh
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What do merchants have to pay for credit cards?

Postby fffresh » Thu May 01, 2008 8:06 pm

I read the processing fees are something like 2.25% plus 25 cents per transaction on average. Man that really sucks for places that only do small purchases. I guess you can see why the credit card companies can afford to give our all those rewards and pay that cash back :ppp


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Postby fffresh » Fri May 09, 2008 6:11 pm

Update:

I just read that the banks the issue (like Citi, Bank of America, Capital One, etc) get roughly 80% of the transaction fees and then Visa or Mastercard gets the other 20%.

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Mogul of Pineapples
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The down low on merchant fees

Postby Mogul of Pineapples » Tue Jun 03, 2008 6:02 pm

Merchants usually have to pay a slightly higher percentage for reward cards. Also when a transaction is keyed into a credit card terminal instead of swiped the fee usually goes up. Basically there's the "qualified rate" which is the standard rate a merchant is charged, but reward and business cards fall under the "mid qualified" rate which can be up to 1.5% to 2.5% higher. Rewards cards can be up to 40% of the transaction fee the merchant pays. A "non qualified" rate is usually the highest rate and that includes keying in the number by hand and some other situations. Those can be 2.0% to 2.5% higher than the qualified rate. Merchants also have to pay chargeback fees can be $25 to $50 each and this is when someone makes a complaint about the transaction to the credit card company and the fee is successfully reversed. Processing fees for debit cards are much lower than credit cards and this is why when you swipe your debit card they usually try and prompt you to process it as a debit instead of credit transaction. Those are merchant fees in a nutshell.
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Postby Multi-Purpose » Thu Jun 05, 2008 6:44 pm

I wonder why business cards they have to pay more for? I understand the whole rewards card thing since the credit card company has to pay more for the rewards, but I don't see any reason why business cards should have higher transaction fees?? :confused:
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