Processing payments is important for your business – after all, it is how you make a living. But have you ever wondered what happens when a customer makes a purchase in your store using a credit card? Do you get confused by the different fees and how they change with different credit card providers? You are not alone; and you don’t have to be lost any longer. Bluefin and RepairQ have created a three-part blog series to guide you through credit card processing, payment security and how to choose a provider. Today’s blog will outline the basics of payment processing, our second blog will discuss the importance of payment security and choosing the right processor, and the final blog will be how payment processing works with Repair Q and the major benefits Bluefin and RepairQ provide.
To sign up for integrated payments with Bluefin and RepairQ today, visit our landing page.
One fee that is charged by your payment processor on each purchase made in your store is a transaction fee, also called an effective rate or a merchant fee. This fee includes the bank interchange fee, the credit card association fees, and the processor fee.
What affects the transaction fee that you are charged?
- The type of business. A repair shop has a different fee than a doctor’s office, or a dry cleaner, due to the potential risk (or non-risk).
- How you process payments. Processing a payment over the phone versu in person or taking the payment online affect your fee.
- The volume of your sales and the average ticket. Volume means the amount of electronic transactions that you process each day (and do not include cash transactions). Ticket size indicates the average size of the order – $10, $100, etc. Both factors will be considered when setting your merchant fee. Generally, the more volume you do, the lower your fee – but don’t over-estimate volume, as you can be penalized by your processor if you come up short on sales.
Why Does American Express Have a Different Fee?
Do you ever look at your monthly statement from your credit processor and are confused why American Express has a different fee than the other cards? There is an easy explanation for this. Interchange rates are set by the card associations. Interchange is the basic flat fee charged by Visa and MasterCard for credit card/debit card transactions. Visa and MasterCard’s interchange rates are publicly available, but rates for Discover, American Express and JCB are available only through the association directly. Rates will vary by card categorization and by association. The average interchange rate for a credit card payment is around 1.81%, while the typical interchange for debit cards is 0.3%.
American Express, unlike the other major credit card companies, does not charge an interchange rate, instead they execute a discount rate. The discount rate is composed of a percentage plus a fixed transaction fee. American Express charges fees based on the on the type of business being serviced. In certain situations, like with retail transactions, your discount rate will be 0.30 points higher if it is keyed in and not swiped.
If the card is present or not present, this also affects the rate that you pay. Card present means that the electronic data is captured at the time of sale by swiping the card, dipping an EMV chip, or using contactless payment. All other methods are considered card not present. Cards that are not present have a higher rate than cards that are present due to risk factors.
Choosing a Payment Processor
In our next blog, we will discuss a bit more about how to choose a payment processor and the importance of security technologies when making this decision. Stay tuned!
Bluefin is a leader in providing simple, easy to implement payment and data security products for today’s omni-channel SMB, including mobile, retail, and Ecommerce solutions backed by our PCI-validated Point-to-Point Encryption (P2PE) solution – helping to protect all in-person and online transactions. To find out more about our industry-leading payment solutions, contact Bluefin today.
If you’re ready to get started with RepairQ or want to learn more about how we’re specifically designed to help you grow your repair business, visit our pricing page and sign up for a free 1-on-1 demo.