Credit Card Companies and Hidden Fees: What To Look For



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Credit card processing companies allow you to process credit cards for a fee. However, some companies will take advantage of merchants, adding extra, unnecessary fees. When you are looking at which company to sign up with, the fees are probably one of most important deciding factors. The problem with these fees comes when they’re not advertised and you’re not expecting them. Therefore, it is wise to gain an understanding of the various fees often charged by credit card processing companies before you sign on the dotted line. The following are some of the most common fees:

  • Hidden transaction fees: In virtually all cases, you can expect to pay 15-20 cents whenever your customer swipes a card; even if the transaction is not accepted. If the customer keys in the numbers, you’ll hand over anywhere from 25 to 30 cents per transaction. What some credit card processing companies might not tell you is that you may also pay even more when people enter a debit PIN.
  • Payment gateway fees: If you’re using an internet processing gateway, as opposed to a terminal or software, expect to be billed anywhere from $15 to $30 extra by your gateway provider or merchant services provider. Also, make sure you understand any and all transaction fees your gateway provider might charge.
  • Monthly minimum fees: If you do not reach this minimum, you will be required to cover the difference. For example, if your monthly minimum is $30 and you only accumulate $20 in fees, expect to be billed for the remaining $10.
  • Annual fee: This is paid once per year. The company charges you this fee to administer your account.
  • Setup fee: Your company may levy this fee to cover the cost of processing your application and opening your account. Increasingly, however, providers are not charging for these services.
  • Chargeback and retrieval fees: These fees run around $25 and only occur when a customer contacts the bank to dispute a charge.
  • Termination or cancellation fees: These only happen if you get out of your contract early. If possible, choose a credit card processing company that charges fixed termination fees, as variable ones can turn out to be extremely costly.
  • Statement fees: Expect to pay anywhere from $10 to $15 for a monthly paper statement.
  • Fees for mid-qualified and non-qualified cards: Unbeknownst to many merchants, credit cards fall into different tiers and you pay higher fees for some than for others. Rewards cards, for example, often fall into the mid- or unqualified categories and generate higher fees for you.

Ultimately, the key is full disclosure. Choose a credit card processing company that is transparent about all of the fees it charges so that you know what to expect and can budget for it. That way, you won’t get a nasty surprise when that first bill comes.