largest credit card processors

If you are looking at credit card processing fees and think that they are confusing, that is not the least bit true. The fee model is made pretty straight forward for all kinds of businessmen to understand such models and choose the one that suits them the most. Credit card processing fees have a lot of different components to them. One needs to understand how credit card merchant services charge the different costs and how one can control such costs. When you understand the ground rules you will be able to get the lowest credit card processing fee and save costs for your business.

Online Comparative Sites

There are online reviews and comparison sites that allow customers to compare the different features of the different credit card merchant services. One does not need to check simply the credit card processing fees aspect but also other criteria when deciding which credit card service to adopt. There are websites where it is possible to seek out free quotes from such merchants. One will find credit card processing cost analysis as well as a breakdown of the different fees and costs. It is important that one understands what every fee is and where it comes from. The work of calculating costs of one’s business is easily done by the software provided by the comparison websites.

Base Cost Characteristics

There are many websites where you will not only gain an understanding of the different costs associated with a credit card service but also how the different components are arrived at. It is important to know that a credit card transaction fee is usually a combination of base costs as well as markups that are called merchant discounts. The merchant discounts are akin to the retail price of a credit card processing. The base costs are defined as raw material expenses while the markup is known as production costs.

Characteristics Of Base Costs:

* These account for the largest portion of expense and then comes on the markup costs

* A lot of businesses are fleeced by their credit card merchant services as they charge base costs as well as markup costs which are equal in amount

* The base fees are usually made of interchange costs and assessment costs

* These are usually the same for all processors

* The base cost is usually fixed and one cannot expect a lower rate or a better deal on the base costs

Interchange Costs

Next comes the interchange costs. These account for the largest portion of the processing expense of credit cards. These expenses are paid to the banks that issue the cards. The interchange costs are mandatory and the processor or the card brands do not gain from the interchange fees. With such knowledge one can look up the fees of credit card merchant services like Visa, MasterCard to understand their fee structures better.
Launching a brand new business can be overwhelming and stressful, especially if it is your very first foray into self-employment. One of the most pressing issues is choosing who processes your credit card payments. You will have to gather quite a few things which require you to set up your merchant account. Below is a comprehensive list most banks require to open a merchant account.

1) Checking account – You can use a personal checking account if you are a sole proprietor but incorporated entities need a business account.

2) Business license, reseller license, or articles of incorporation – Merchant Service providers need to make sure you are a legal entity and are allowed to conduct business in your area.

3) Pictures of your offices/store front – With the large amount of fraud and the simplicity of getting incorporated, merchant service providers need to verify you are conducting business in the location specified. Many will actually visit your place of business.

4) Website – Mandatory if you are conducting online business but not necessary if you are a physical store that does not take orders online.

5) Return – Merchant Service providers require a written return policy printed on your receipts.

6) Tax Returns/Financial Statements – Your past 2 years tax returns as well as profit/loss statement are required to receive the very best rates.

After you become qualified for a merchant services account, the next step is to decide your methods of receiving credit card payments.

Point of Sale (POS) Terminal

In our experience helping past clients’ setup their ecommerce websites to compliment their physical store, we found that setting up the physical POS terminal is where they were taken advantage of the most. From our research and experience, BUY the credit card terminal instead of leasing it. Virtually all of the merchant providers partner with a leasing company to lease terminals to customers. The sales people earn more from leasing you’re a terminal than they do opening up an account. A simple swipe terminal might cost $400 but we found the merchant providers charging $50-90 per month for a terminal with a 3-5 year contract. If you do the math you’ll be paying thousands for an item that cost $400. Just do a Google search of credit card terminals and you’ll find they cost around $400 for the models you see at most mom and pop stores. (Btw, the sales person makes approx $500-800 from the sale of a leased terminal from our research. If you don’ t believe us, go on Hotjobs or Monster and pretend to want a job. They’ll explain the commission schedules to you!) We also recommend avoiding free terminals. If you read the terms carefully the “free” terminal costs thousands more over time due to the higher transaction rates.

Additionally, if your customers pay by debit transaction (i.e. entering their pin) on a physical terminal, you have to pay a swipe fee but no transaction rate. We’ve seen some merchant providers charge a percentage rate on debit transactions. Those merchant providers are being dishonest and should be avoided.

Do your homework as all of the established terminal manufacturers build devices that are compatible with all of the major banks. While there are thousands of merchant services providers out there, all of them have to have the backing of a bank such as Wells Fargo, HSBC, or Chase to conduct business with VISA, MasterCard, Discover, or American Express. Established terminal manufactures build devices that are fully compatible each of the banks processing software. If you buy a terminal that is only designed for a particular merchant service provider, you will have to buy another terminal if you ever switch providers!

Payment Gateway

If you plan to conduct business and receive payments online, you’ll have to setup a merchant account with a payment gateway. You also can setup a Google Checkout or PayPal account for online sales, but they limit you to customers who have those accounts. We suggest a combination of both to maximize your sales and revenue.

A payment gateway is the online equivalent of a physical Point of Sale Terminal. It provides secure transactions and protection of the customer’s credit card data. In most cases the payment gateway is a separate company than the merchant services provider. The largest payment gateway is, and you’ll find most merchant service providers out there will use as their payment gateway. Large banks such as Chase have their own payment gateway so you should investigate which works out best for you.

Customers should be aware that online transactions have a higher transaction rate due to the higher risk factor. There really isn’t any way to get around these higher rates. Another fee you should be aware of is the monthly minimum for a payment gateway, which is often an extra $30 per month.

Negotiating Fees and Rates

Depending on your sales volume and banking relationships, you can haggle for a lower rate. What our clients should know is that the only rates that are set in stone are the one’s charged by VISA, MasterCard, Discover, and American Express. You’ll never receive those rates exactly because of the costs incurred by the banks and merchant providers and the fact that every business needs to make money, but you can negotiate rates and fees depending on your sales volume.


We hope this article has helped you on your path to choosing the right merchant services. A great resource you should go to is the Better Business Bureau when choosing a merchant services provider.

Before we let you go, I wanted to let our client know that Twenty Tigers does not take a percentage of any of your sales for ecommerce sites like some of our competitors, nor do we get a fee or commission from any merchant service or payment gateway. We can set up your site with PayPal, Google Checkout, and ANY merchant service or payment gateway you choose.

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