# Credit card processing fees?

7 replies
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I am currently using by bank to process customers credit cards (BOA)

Problem is I am getting hammered with interchange fees and discount fees.

Does anyone have a suggestion who I can switch to so I dont get hit with these fees?

I know paypal is at 3% but that is not much better either.
• 3% is not that bad actually.

Best deals are around 2% but then you have to have decent monthly volume.
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• I agree, 3% is not that bad actually.

If you have a real high sales volume, then I'm sure you can negotiate 1.9% .
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• This question is solved simply by doing a bit of math.

Estimate your average monthly sales and number of transactions, for this example lets say its 10k/month and 50 transactions

Paypal charge a 2.4% transaction fee and 30c per transaction
\$10,000 * 2.4% + (50 * \$0.30)
= \$240 + \$15
= \$265

Total cost of Paypal per month is \$265

Now look at a merchant account
Merchant account: \$30/month + 1% transaction fee

Payment gateway: \$25/month + 45c per transaction

Total cost = \$30 + \$25 + (\$10,000 * 1%) + (50 x \$0.45)
= \$55 + \$100 + \$22.50
= \$177.50

With these numbers, a merchant account is better

Plugin your own numbers, do the math, and you'll be able to see what's better
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• I recommend using Stripe. They charge 2.9% + .30 cents but they don't have a lot of those "hidden fees" associated with other merchant accounts.

https://stripe.com/us/help/pricing
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• I would second stripe too. I've used them and they are great. The only drawback is a seven day hold on your funds.

Once you start doing real volume your best bet is probably authorize.net with 1.9% per transaction.
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• 3% for online transaction is good fee
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• Well, let me clarify some things to you. Each credit / debit card has its own rate given from Visa, MC, AMEX or Discover, Paypal charges over 3% in order to make sure they get paid, some cards can go for 0.05% + \$0.21 from Visa (Regulated cards by Visa - check this link out: http://usa.visa.com/download/merchan...s-june2012.pdf) but others go for 1.65% + \$0.10. What credit card processors do is they usually charge a percentage above the real interchange. So if for example you have 0.50% "pass-through" you will be paying your credit card processor the real interchange (lets say 0.05% + \$0.21) + 0.50% processing fee which will come up to 0.55% + \$0.21. Paypal makes tons of money from people that are just not familiar with other ways to process cards, their fees are way too high. I would recommend you to look for a credit card processor other than Paypal in order to save in fees.
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