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Title: What is the average processing fee for a credit card transaction? Post by: surebet on January 22, 2014, 03:06:15 AM Hello,
Long story short I got into an argument with a few friends over a beer last night and we had a disagreement over what the average merchant pays in transaction fees when they accept credit card payments. I'm trying to figure out what the common perception is. Optional Reply to this post saying where you are Argue for or against including chargebacks and other incidentals in the overall fee Tell me what you think the average chargeback rate is (for a specific industry or in general) Feel free to add anything else! Title: Re: What is the average processing fee for a credit card transaction? Post by: Vod on January 22, 2014, 03:27:02 AM 20% for sure. If not at least double or triple that.
Title: Re: What is the average processing fee for a credit card transaction? Post by: Frost000 on January 22, 2014, 04:48:06 AM I voted 4% to 6% though I honestly have no clue.
From what I understand, and I could very well be wrong, don't they charge a small base fee (say $1-$2) and then a percentage on top of the base fee? Title: Re: What is the average processing fee for a credit card transaction? Post by: DeathAndTaxes on January 22, 2014, 04:54:52 AM There is no standard rate, it varies significantly from one processor to another and one merchant risk profile to another. Walmart (massive volume, card present=swiped, low fraud rate) probably secures custom deals for an interchange below 1%.
On the other hand an adult services company (low volume, card not present, high fraud rate) can end up paying 10% or more. Throw in the cost of anti-fraud screening, and the cost of chargebacks (getting hit with $35 chargeback fee when your average purchase is <$35 is going to hurt your bottom line), the true cost can approach 15% or more. Title: Re: What is the average processing fee for a credit card transaction? Post by: Kluge on January 22, 2014, 05:02:56 AM There is no standard rate, it varies significantly from one processor to another and one merchant risk profile to another. Walmart (massive volume, card present=swiped, low fraud rate) probably secures custom deals for an interchange below 1%. There's also the fixed fee many apply, either in the form of membership/subscription fees or possibly fixed-cost fees (usually called "transaction fees") added on top of the percentage-based fee. You can factor in the cost of hardware and training, too. It's hard to determine an "average" without a shit-load of data and a team of people going through it. You're probably looking at 2.5% on the very low side, 20%+ on the very high side if a merchant deals in low-value transactions (US). I'd guess it probably averages to around 4-6% after all's said and done (if not, higher).On the other hand an adult services company (low volume, card not present, high fraud rate) can end up paying 10% or more. Throw in the cost of anti-fraud screening, and the cost of chargebacks (getting hit with $35 chargeback fee when your average purchase is <$35 is going to hurt your bottom line), the true cost can approach 15% or more. Title: Re: What is the average processing fee for a credit card transaction? Post by: surebet on January 25, 2014, 04:33:06 PM Weekend bump, vote vote vote!
Title: Re: What is the average processing fee for a credit card transaction? Post by: guybrushthreepwood on January 25, 2014, 04:47:22 PM 20% for sure. If not at least double or triple that. What? ??? There's no way it's that much. I think it'll be around 5%. Title: Re: What is the average processing fee for a credit card transaction? Post by: hilariousandco on January 25, 2014, 04:50:26 PM 20% for sure. If not at least double or triple that. Are you on about APR on personal credit cards? If so, then it's usually around 20%. Not sure how much merchants get charged but I don't think it's much, but it adds up quickly. |