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| Name | How Do Credit Card Processing Fees Work? |
| Video Uploader | Video From EBizCharge |
| Upload Date | This Video Uploaded At 08-08-2017 21:12:43 |
| Video Discription | For more information on credit card processing, visit us at https://www.centurybizsolutions.net/ Script: Merchant: Hello. Can you explain how credit card fees work? AI: Absolutely. What do you want to know? Merchant: Everything. Start from the beginning. AI: Well, let’s see… in 6,000 BC, a system called bartering was developed to help early humans exchange value— Merchant: Wait, that’s too far back. I want to learn how credit card processing fees work so I can finally understand my monthly statements. AI: I can help you with that. I’ll start by explaining the entities that are involved in credit card processing. Here’s what a normal credit card transaction looks like from your perspective. Your customer gives you a credit card, and you run it. Merchant: So far so good. AI: But when you zoom out, it’s a much more complex picture. With every transaction, there are five entities involved, each playing an important role. You have the customer’s bank, the credit card brand, the credit card network, the processor… Merchant: And then there’s me. AI: And then there’s you. Here’s the thing, Merchant. Each of those entities will charge you a fee for every transaction. The largest fee comes from your customer’s bank, and it’s called the interchange fee. The card brand charges an assessment fee, and the card network charges you an authorization fee. Lastly, your processor charges you a discount rate. Your interactions with the first three entities are usually minimal. That’s why the processor exists—to maintain your merchant account and communicate these fees to you. Your processor keeps you in the game, so to speak. Make sense so far? Merchant: Yeah. So can I haggle with the credit card processor to lower all those fees? AI: No, the only fee that you can significantly change is the discount rate, which the processor controls. But that can make a big difference in your monthly statement. Merchant: How can I do that? AI: Well, you can do a couple of things, Merchant. Credit card processors will offer you three pricing plans: interchange plus, flat rate, and tiered pricing. Avoid tiered pricing. That plan is the least transparent and you are more likely to be overcharged on your transactions. Merchant: Avoid tiered pricing, got it. AI: Right. If you’re choosing an interchange plus plan, negotiate for a lower discount rate from your processor. If you’re choosing a flat rate plan, negotiate for a lower overall flat rate. You’ll have to do some research and take a look at your past transactions to know what a fair rate for your business is. One more tip—make sure you’re processing credit card transactions as securely as possible. It’s one of the few ways you can lower your interchange fees. Merchant: Why does that matter? AI: You’re showing the banks that the transactions you process have a lower risk of fraud, which they reward with lower rates. Merchant: Ohh. AI: Here are four ways you can secure your transactions to reduce your interchange fees. First, enter in additional line-item information, address, and zip code when running a credit card. Second, use a payment application or payment gateway that allows for more secure levels of processing. Third, when you preauthorize a transaction, make sure to capture it within a couple of days of the preauthorization. And fourth, don’t capture for more than the original preauthorization. Merchant: Thank you. AI: You’re welcome, Merchant. 0:00 - Credit Card Processing Fees 0:36 - Entities Involved in Credit Card Processing 1:08 - Credit Card Fees - Each Entity 1:51 - How to Lower Processing Fees |
| Category | Science & Technology |
| Tags | Credit card processing | Credit card processing for QuickBooks | credit card processing with QuickBooks | quickbooks | merchant services |
