I once went to a deli in Boston, and when I attempted to pay with a credit card, they said that the process will cost them almost 10% of the entire sale. This was curious to me since I had always assumed that card fees (those associated with payment terminals) are only around 2-3% in the U.S. Is the following breakdown correct, or are the acquiring bank and association fees usually included in the payment processing fee? I also know that Apple Pay, etc. take a small fee as well, but I have not included that.
Where does my $100 go?
- Payment Processor: Assume a payment fee of 2.9% plus a flat fee of $0.30
- Merchant Account Provider: The merchant account providers charge a monthly fee of $20 and a transaction fee of $0.10
- Acquiring Bank: Acquiring bank could charge fee upwards of 1.5%
- Card Associations: The card association sets the interchange fee, which let’s assume is 2% of the transaction amount.
Thus, breakdown is as follows:
- 2.9% of $100 + $0.30 = $3.20
- 1.5% of $100 is $1.50
- 2% of $100 is $2.00 Total fees are $6.80, meaning merchant is left with $93.2