This post was originally published on On Deck
If your small business accepts credit cards — in person or online — you’re paying processing fees. And depending on how your payment processor sets up your plan, those fees may be cutting deeper into your profits than they should.
Here’s what small business owners need to know about how credit card processing fees work — and how to keep them from hurting your cash flow.
What are credit card processing fees?
Credit card processing fees are the costs your business pays to accept credit card payments. These payment processing fees cover the behind-the-scenes work that happens every time a customer pays you with a credit card — including approval, fraud checks, fund transfers and payment settlement. The total cost is usually made up of several different fees charged by different players in the payment processing ecosystem, including:
Interchange fees. These are fees paid to the cardholder’s bank (the card issuer).
Assessment fees. These are fees paid to the credit card network (like Visa or Mastercard).
Processor markup. This is paid to your payment processor or merchant services provider.
You’ll also see fees for things like chargebacks, payment card industry (PCI) compliance, monthly service or minimum usage, depending on your
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