… and here’s a more detailed explanation: Level 1ĭata included in Level 1 is the most basic and is required for any transaction to be completed. Here’s a high-level view of what’s included at each level. Generally, you’ll need to connect with your gateway processor to enable the capture of Level 2 and 3 data. The methods for capturing data vary by data level. The additional information makes the transaction less risky, which is a significant reason behind why adding additional levels of data tends to lower your interchange fees. Generally, the higher the level, the more information that is included. There are three levels: Level 1, 2, and 3 (also referred to as Level I, II, and III). Minimum monthly fee: A charge between your monthly GPV (credit card dollars processed) and the monthly minimum you agreed uponĭata levels are a set of information fields required for a transaction to be completed.Monthly statement/support and service fees: You may find that payment processors charge a flat monthly fee for activities such as customer support, as well as printing and mailing your monthly statements.AVS: Short for “Address Verification System”, it applies to manually entered transactions and matches customer billing information to the card on file (charged on a per-transaction basis).Wireless access fee: Charge for a cloud-based POS terminal instead of a phone line.Hosting fees: A fee for supporting traditional server-based POS systems.Batch fees: Also called “batch header fees”, this is a charge for the settling your deposits daily.POS hardware rental: A cost to rent your POS terminal hardware and other associated equipment each month.POS software (monthly SaaS fees): An amount you pay your POS software provider each month.Chargeback: A fee you incur whenever a customer issues a chargeback for a payment.PCI compliance: A security standard all businesses must comply with to accept credit cards.Payment gateway: The facilitation of passing funds from your merchant account to your payment processor.Here’s a fuller list of potential other fees: In addition to those above, there are also a variety of credit card processing fees you could end up paying, including batch fees, wireless access fees, and hosting fees. The interchange rate for a debit card is around 0.3%, while the average credit card has an interchange rate of about 1.81%. The rate also depends on the brand and type of the card, as some will have higher rates than others. ![]() ![]() A basic card will have lower interchange fees than an international business card with plenty of rewards. The credit card issuer will then pay it to the issuing bank.ĭifferent credit cards are charged different interchange fees. This cost varies by processing company.Īs a merchant, you pay interchange fees to the payment processor, who pays the interchange fee to the credit card issuer. Some payment processors also add a fixed dollar amount per transaction, typically from $0.10 to $0.30 as part of the interchange fee. Individual credit card payment networks like Visa, MasterCard, American Express, and others have published, percentage-based interchange fees. Because it’s such a critical function, this fee makes up 80% of the cost of accepting credit cards. Interchange fees are paid to the issuing bank (the cardholder’s bank) by the acquiring bank (the merchant’s bank) to cover the costs associated with the risk of approving the payment. Interchange fees (80% of total processing cost)
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