What to expect in pricing offers if you are a U.S. merchant
Visa & MasterCard
Payment processors base their merchant account pricing on a number of factors including industry type, sales volume, product value, sales channel and certain risk factors. This is the reason we collect information like this in the short questionnaire you complete when you utilize our service. Offers will generally be presented using two models:
bundled and pass-through.
Pricing Offers: The following table illustrates the range of
discount rates you are likely to encounter based on your sales channel and/or risk category. Your pricing will generally consist of two components, a percentage-of-sale component and a fixed per-item fee, both of which are discussed in
pricing format basics.
As an example, a merchant whose orders originate on the Internet might expect a discount rate of 2.5% + $0.35. Please be aware that
additional account fees might apply, so be sure to review your offers very carefully.
Pass-through Pricing Offers: One of the most desirable aspects of pass-through pricing is that payment processors generally keep their fees simple. While you still need to pay interchange and assessments (pass-through), these are set by the Associations and are non-negotiable. The payment processing fees charged by the processor, however, are completely negotiable.
In most cases, processors will offer you a fixed fee. You may also be charged for other types of transactions like disputes (chargebacks). The following example illustrates what a low-to-moderate volume merchant selling low risk products might expect to pay its processor exclusive of pass-through fees.
This is only an example, and you may be able to negotiate yourself lower fees. Merchants selling high-risk products, on the other hand, might expect to pay more than this. Again, be aware that
additional account fees might apply, so be sure to review your offers very carefully.
Want to know what your pass through fees will be? Fortunately,
Visa and
MasterCard both publish their interchange rates and assessments online. These rate tables can be confusing, so it would be best to review your expected pass-through costs with your payment processor.
American Express
As we discuss in
Credit Card Systems and Models, you, as the merchant, contract directly with American Express. For reasons of convenience, however, most merchants process their transactions through payment processors. This is often called “conveyance” because the processor merely conveys the transactions to American Express. In this manner, merchants maintain a sole source for submitting all credit card transactions. This practice also allows the merchant to receive a consolidated payment processing report.
Many payment processors will complete the American Express merchant application for you; however, you may have to do this yourself. You will receive some reports from the processor, but the bulk of your reporting will be provided online by AmEx. Fees for processing AmEx are called conveyance fees. Like a pass-through model, processors generally charge a fixed, per-transaction fee for each authorization and settlement you process. This is on top of the discount AmEx will deduct from your deposits. Fees for AmEx conveyance will generally run between $0.05 and $0.25.
Discover Card
Discover Card processing is unique in that it can operate under both the
open-loop or closed-loop systems. Some processors will simply convey the transactions, in which case pricing will be similar to American Express pricing at between $0.05 and $0.25. For processors that process Discover using the bundled model, you can expect pricing along the same lines as Visa and MasterCard illustrated above.