Credit card processing fees are (unfortunately) a part of life when it comes to running a small business, especially if you run a brick-and-mortar store. Easy swiping (or contactless) payments makes life easier when you’re open, and customers like to shop places where their preferred method of payment is accepted.
That said, fees have been getting out of hand for a while now. The major vendors keep increasing rates, and you may be paying more than you should be.
So, are you paying too much? How can you put cash back in your pocket? Here’s everything you need to know about credit card fees for small businesses.
Credit card processing fees, on average, range from 1.3 to 3.5%, according to NerdWallet. Not included is the flat rate tack on of $.05 to $.10 (for retail) that is added to each transaction. Online transactions often have a higher fat rate fee attached—sometimes as high as $.50, depending on the industry you’re in.
So for every $100 your business earns, you pay roughly $1.30 to $3.50 (plus the transaction fee) to a merchant like Visa, Mastercard, or American Express.
A few dollars here, a couple cents there. It’s the cost of doing business, right? Maybe, but if your business is in retail or your customers do a lot of in-person credit card swiping, those fees add up. According to a Nilson report, $9.4 trillion was exchanged through credit cards last year!
Not only that, rates have been increasing drastically in recent years. In 2022, a group of retailers campaigned against credit card companies like Visa and Mastercard for hiking up rates right after the Fed increased interest rates. It’s getting to a point where staying competitive against big-box retailers is impossible with these additional fees.
While credit card fees may be nothing new, they can bleed your business of profits and the increased rates with no end in sight or eyes toward regulation are a cause for concern.
Here are some things to look for to decide if you’re paying too much in processing fees:
Here are three additional quick tips to help you reduce fees.
Contact us to learn about your credit card processing fees today.