Most business have trouble figuring out exactly what they are paying for credit/debit card processing. Statements are very complicated as are contracts with so many rates for credit cards it is very difficult to understand your statements. Not to mention the almost daily phone calls offering to save you 20% to 40% on your fees, note for most processors there just isn’t 20% markup so the odds of savings of 20% to 40% are unlikely. Rather than try to explain pricing again we will try to give you a simple method to compare your costs.
Debit accepted in person is the cheapest way to accept electronic payments and should be between $.05 and $.07 per transaction (competitive market rates). Most debit cards now are equipped to be processed through either the MasterCard or Visa networks for card not present transactions, internet, phone orders etc. The costs for these are generally the same as accepting a “qualified” credit card unless you are on a cost plus plan (cheaper). If they rate is not shown on your statement look for “IDP”, “Interac” or “Debit” transactions and divide the fees by the number of transactions. Note some companies charge a “network”, “association” or “brand” fee for Interac transactions that should be added in. Visa and MasterCard Debit will be shown separately if they were done as a card not present transaction, divide the fees by the sales to get a % fee.
What you pay here depends upon how, where and who you do business with below are some general guidelines based upon our experience. For all of these take your bottom line costs and total sales, subtract debit sales and fees get a % cost by dividing the remaining cost by the remaining sales:
Card Present with the General Public
The least expensive way to accept credit cards should be around 1.75% to 1.95%. This will vary with your clientele, a well-heeled clientele will qualify for rewards cards that cost more to process.
Card Present Tourist Area 50% Foreign Sales
The biggest increase is cost here is the foreign assessment fee of .45% that goes on every foreign transactions. The bottom line cost for this will vary depending upon whether they markup the assessment fee and if they also charge the Canadian assessment fee and mark it up. The cost for these should be 2.00% to 2.20%
Business to Business 60% Plus Card not Present
If most of your customers are businesses 2.15 to 2.35% you are going to pay. Often business owners pay with their credit cards to earn points (which you pay for). To make it worse when you take the number over the phone the cost goes up by .25% for Visa but is the same for MasterCard.
General Public Online
More expensive than face to face transactions but cheaper than business to business. Will vary with more foreign cards and rewards cards. Should cost you between 1.90% to 2.15%
*Based upon history of SmallBizAssist clients in Canada