It’s important to understand that many card payments costs vary between provider and are often negotiable. There are many elements of your business which will affect the pricing you are offered, including:
If you think you might be getting offered a bad deal get in touch with us and we’ll put you in touch with somebody that can offer something better. We won’t charge you a single penny for the recommendation either.
There is a lot of complex terminology in merchant services, so it’s understandable that business owners get confused. Comparing statements which aren’t set out in a standard format is a nightmare and providers are all different.
But what is an MSC, and how does it work? The merchant service charge is made up of three factors.
The biggest part of the transaction cost is normally the acquiring fees, but what are acquiring fees? And why can they be so hefty?
These are the fees charged by the processing bank (known as the acquirer in the world of payments). The costs tend to cover their overheads, with some profit margin, and they bit they add significantly extra in order to try to insure themselves against risk when dealing with higher risk industriesThis means that there is often room for negotiation when it comes to this particular part of the transaction fee. It’s the part our unbiased Brokers love to work on to drive costs down (hint hint).
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It’s really difficult to give exact figures, due to the variable factors listed above. However, depending on the risk surrounding your business you can look to pay anything between 0.6% and 6% (reserved for the most high-risk companies) in acquiring costs.
It’s worthwhile noting that costs can be higher if you go through an ISO (independent sales organisation) such as Takepayments, Paymentsense etc. This is due to the fact companies like this add their profit margin onto the acquiring fees – so despite often not charging a fee for their service, commission is paid from the acquirer to the ISO, thus increasing the cost incurred per transaction.
Most banks offer interchange pricing. However, some offer blended rates which include acquiring fees and interchange fees. The interchange costs are the fee which the acquiring bank pays to the card issuer every time a transaction is made. Put simply, the issuer is the customer’s bank; i.e HSBC, Santander, Barclays etc etc. These costs are a fixed cost, so no room for negation here I’m afraid, and normally charged at a percentage rate. Comparatively speaking normally, the smallest/cheapest part of the transaction overhead.
Typical costs for interchange are 0.2% for debit cards and 0.3% for credit, commercial cards (company business cards) are charged slightly higher.
Scheme fees are another name for the card company, ie Visa, Mastercard, UnionPay etc. These are charged to cover the cost of providing their payment network, like a maintenance fee. Scheme fees include; assessment and clearing costs, settlement fees, and cross border fees (if relevant). Scheme fees are affected by a number of factors. These include:
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If you are already accepting card payments, or you’ve received a quote from an acquiring bank, you may be thinking that some of the costs listed on your transaction statement haven’t been mentioned yet. This is due to the fact there are several non-transactional fees that are charged. To make this easy for you we’ve listed them here.
Most acquiring banks and ISO’s do not publish pricing, unlike payment facilitators like Zettle, SUMUP and PayPay. The reason for this is that the pricing is bespoke to each business. However, it’s worthwhile knowing that there is a strong link between card turnover and how cheap card payments become. Other elements considered before pricing is offered include;
Despite pricing not being published, most ISO’s and acquiring banks have the ability to negotiate within reason. Card turnover and the profit margins of accepting ongoing transactions has a huge part to play in pricing structure. Understandably you’re going to want to achieve the best price possible, however important elements such as security, functionality and suitability shouldn’t go a miss.
When comparing merchant accounts you should do so on a pound for pound basis – to do so use your transaction statement from your existing provider to see where overheads can be reduced.
Get a QuoteTransaction fees offered to businesses processing payments fall into four pricing categories;
The majority of businesses are on standard pricing known as blended rates. Here we look at each costing and what it means.
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