Understanding Payment Fundamentals
At CPC we work with each of our clients to make sure they understand the fundamentals of credit and debit card processing. Credit card payments is one of the most misunderstood and yet most costly decisions that a merchant has to make. So please bear with us, as we walk you through the following information will educate you about the costs involved in accepting payments, and hopefully gain your trust in letting us at CPC become your next payment processor.
Over the next few pages you are going to gain an understanding of exactly what fees you are paying to Visa and MasterCard, to the processing Bank, Independent Sales Organization, and to the processing platform.
As you may or may not know no one gets any special treatment from Visa and MasterCard. Every merchant, bank and payment processor get the same rates and fees from Visa and MasterCard, including Wal-Mart. This will become especially clear as we start to break down the composition of an individual transaction and the costs associated with that transaction.
While, each merchant is treated the same by Visa and MasterCard, the rates and fees that Visa and MasterCard charge you, the merchant, can vary significantly. They are more than 50 different rates and fees that can apply to any one particular transaction that you the merchant accepts. These are known as Interchange rates and fees.
Now, these Interchange rates and fees will vary depending up the type of Visa and MasterCard accepted (Regular, Corporate, Business, Rewards, etc), how it was accepted (Swiped – Face-to-Face, Key Entered, eCommerce, Recurring, etc), and how much data was entered and pass-through to the processor (AVS: Address Verification, Track Data, Auth Code, CVV, etc) and the if the data was passed to the processing bank in a timely fashion to get the highest qualification on the transactions.
As we walk through this process you will gain an understanding of the true costs from Visa and MasterCard, and you will also gain insight in to the other rates and fees you the merchant are charged by the processing bank, the ISO, and the processing platform. Each of those costs are comprised of and associated with the sale, support, processing and securing of the risk each party has in accepting and processing your transactions. Where you realize it or not, credit card acceptance is a privilege not a right and a credit card processing account is for all practical purposes an open and unsecured line of credit for your business.