Today I had a service call to get my washing machine working. (The problem turned out to be the lid switch had failed mid-cycle.) When I called for service, the gentleman told me that they don't take credit cards. I hadn't asked about it; he was just making sure I knew up front. I was fine with that and told him I'd pay by check.

He was talkative and went on to tell me they stopped taking cards when their processing center charged them $65 on a $100 charge. I'm sort of dense, and forced the meaning to be a 35% overhead. He corrected me back to the 65% originally stated. Mentally that seems way too high; I always thought the overhead on cards was 5% to 10%. He had no reason to make that up, though. I hadn't pressed the issue of them not taking cards at all, and everything he told me about it was him just talking. The only point where I questioned anything was when I asked about the 35% overhead. The brand of card was never mentioned.

Did he make that up, or can small credit-volume businesses experience processing costs as high as 65%?

  • 2
    I'm sure you can sign up for some incredibly expensive services if you try hard enough, but there are options for below 5% too. – Aganju Nov 14 '18 at 20:55
  • Hi new user. They're pretty high, but not that high. the answer by Rupert explains it perfectly. – Fattie Nov 15 '18 at 3:40

Processing fees (including the percentage charged on each transaction) are generally based on the number of transactions in a month and the average value of those transactions. I suppose it's possible that if you had a month where you had one transaction for $100 the fees could add up to $65 (though that's much higher than I'd expect), but that's not the same as paying 65% on each transaction.

It's also possible that there was some problem with the transaction, such as it being an overseas card, or the transaction was flagged as fraudulent, but I've not heard of such high fees unless the retailer was negligent, and then they're usually 100%.

But I think the most likely explanation is that the guy you spoke to on the phone was incorrect.

  • Which also makes sense because how would a low level call center operator know details of the financial decisions? Happens only in small companies - here likely some stuff was "trickling down" and totally deformed by the time someone heard it. And yes, 65% makes only sense as "5USD on a 100USD tx and a base fee of 60 USD for the month", which then is 65% total - but for ONE transaction. – TomTom Nov 15 '18 at 11:15
  • @TomTom I got the impression that the guy on the phone may have been the (co?)owner. He had an older voice and just spoke like he had authority there, and he had been there a long time. Unless they had had a really bad month, I cannot imagine a business with multiple service trucks only ending up with one credit card payment during the month. Perhaps it's possible they had been shut down a while and only worked a few days one month. Anyway, thanks everyone for sharing info, and verifying normative processing charges are the 5% to 10% I had thought. – RichF Nov 15 '18 at 18:50

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