Glossary
Merchant Processing Rates
Merchant processing rates are the fees that businesses incur to process credit and debit card transactions. These rates are essential for merchants to understand, as they directly impact the cost of accepting these payment methods. Typically, the fees are structured as a combination of percentage-based charges and fixed fees per transaction.
The combination of these fees constitutes the merchant processing rates and is usually negotiated between the merchant and the payment processor. Factors influencing these rates include the merchant’s monthly processing volume, the average transaction size, and the perceived risk associated with the merchant’s industry (e.g., high chargeback industries like travel and entertainment might face higher rates).
It's important for merchants to thoroughly understand these rates and negotiate them where possible, as they directly affect the profitability of each transaction. Comparing rates and services from different processors can help merchants find the best deal, potentially saving substantial amounts in transaction fees over time.