Credit cards are one of the most popular forms of payment, but they are not without costs. Every merchant that accepts credit cards must pay a portion of their proceeds as a credit card transaction fee, also called credit card merchant fees.
If you are a merchant that is considering accepting credit card payments or you are already doing so, then you may be wondering how much you should be paying in processing fees and other costs.
Average Credit Card Processing Fees
On average, credit card processing fees range between 1.5% and 3.5% of the amount of each transaction. Credit card processing fees vary by payment network, as you can see in the table below:
What Is a Credit Card Processing Fee?
There are two components that make up the merchant’s cost of credit card processing. The first is the percentage of the transaction each time a credit card payment is made. The second are several other kinds of fees that a credit card processing fee may include, such as interchange fees, payment processor fees, and assessment fees (more on these in the next section).
3 Types of Credit Card Processing Fees
As mentioned, there are various additional fees that a credit card processing fee may include on top of the percentage of the transaction amount.
1. Interchange Fee
An interchange fee is collected by the credit card issuers. If you are using a Capital One card on the Visa network, for example, then Capital One receives the interchange fees.
These fees are typically a percentage amount, plus a small fixed amount (usually up to $0.25). The amount can vary depending on the type of card, the type of business being operated, and how the payment is processed, such as whether the transaction is made online or in person.
2. Payment Processor Fee
The payment processor fee is charged by the company that accepts the payments and transfers it to the payment network. This company can either accept cards themselves or by processing online transactions.
The payment processor can charge multiple fees, including a per-transaction fee, a monthly service fee, and charges for the processing terminal.
3. Assessment Fee
The assessment fee is charged by the payment network, such as Visa, Mastercard, or American Express. These fees are generally based on total monthly sales rather than being collected per transaction, and the amount can vary depending on factors such as transaction volume, whether it’s a debit or credit card transaction, and if it’s a foreign transaction (an important credit card definition to know).
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Pricing Models for Credit Card Processing Fees
Credit card processing companies charge fees in different ways, including tiered pricing, flat rate pricing, and interchange plus pricing. Choosing the right pricing model for your business can be as important as choosing the right credit card as a consumer.
1. Tiered Pricing
With the tiered pricing model, each charge is grouped into one of the processor’s tiers, which has a fixed fee. With this model, some transactions will be charged at a lower rate, while others will have a higher rate. If most of your transactions will qualify for the lower rate, then this model can make sense.
2. Flat Rate Pricing
With flat rate pricing, the processor charges the merchant a fixed percentage of each transaction, along with a small fee. This model can be the most predictable for merchants.
3. Interchange Plus Pricing
Interchange Plus pricing is when merchants pay the interchange rate plus a preset add-on fee for each transaction.
Credit Card Processing Fee Example
Let’s say you have a dog sitting business and decide to start accepting credit cards for payment. After looking after the neighbor’s pooch for 10 days, you charge your customer’s credit card $150 using Square as your payment processor. Square is a popular payment processor that allows customers to quickly set up an account and process cards using a simple attachment to their mobile phone.
Square will charge a fee of 2.60% plus $0.10. For your $150 pet-sitting charge, this means that Square will take $3.90 plus $0.10, for a total of $4.00 in fees. After fees, you will receive $146.00 for your services.
Are There Other Fees to Look Out for?
There are several other potential fees that you need to be aware of outside of credit card processing fees. These can include monthly services fees and fees for equipment purchase or rental. Additionally, you could face fees if a customer were to dispute a charge, as well as fees for chargebacks and non-sufficient funds.
Consider Credit Card Offers With Lantern
Credit card processing fees range between 1.5% and 3.5% but vary by payment network. Additionally, there are various types of credit card processing fees to be aware of and different pricing models that can affect how much you ultimately pay.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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The average American debt by age
You may hear this term being batted around in conversations surrounding billionaires, but in reality, everyone has a net worth. It’s simply a total of all your assets minus any debts you have.
Those assets can include cash, real estate, intellectual property, and other items like jewelry, stocks, insurance policies, and bonds. The cash may come from a job you have or from unearned income, such as your Social Security payment
Having a lot of assets does not necessarily mean you have a high net worth, particularly if you also carry a lot of debt. For example, you may have a million-dollar mansion, but if you have debts of $500,000, your net worth dwindles rapidly.
Jinda Noipho/istockphoto
There are many personal net worth calculators available online, though you don’t need one to calculate your net worth. Just take the total amount of all your assets and subtract the total amount of your liabilities:
Assets – liabilities = net worth
Some calculators will also factor in future growth so you can understand what your net worth will be in the future, as the value of your assets grows.
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SARINYAPINNGAM/istockphoto
As you can see, it’s fairly easy to calculate your net worth, though it may take time to gather the values of all your assets, such as the current value of a piece of high-end jewelry. But once you do, you can add up all your assets and then subtract your liabilities to calculate your net worth.
wutwhanfoto/istockphoto
Knowing your own net worth is one thing, but where does it stand against other people in your age bracket? Generally, people see an increase in their net worth the older they get, and it can be helpful to use a net worth percentile calculator by age to see your percentile rank.
For example, if your net worth was $100,000, you would be in the 46.92 percentile for people between the ages of 18 to 100. The median net worth for this age bracket is $121,760.
Here’s the average net worth by different age groups, according to the most recent data available from the Federal Reserve.
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Average Net Worth: $112, 104
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Average Net Worth: $120,183
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Average Net Worth: $258,075
PeopleImages/istockphoto
Average Net Worth: $501,295
Drazen Zigic/istockphoto
Average Net Worth: $590,710
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Average Net Worth: $781,936
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Average Net Worth: $1,132,497
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Average Net Worth: $1,441,987
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Average Net Worth: $1,675,294
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Average Net Worth: $1,836,884
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Average Net Worth: $1,714,085
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Average Net Worth: $1,629,275
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Average Net Worth: $1,611,984
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Calculating your net worth is smart because it can help you understand where you’re strong financially (maybe you have little debt) and where you’re weak (maybe you’ve overextended your credit to buy your home).
It may also help you make plans for the future. For example, if your net worth is high, you might explore strategies for reducing taxable income, such as contributing more to a tax-deductible retirement account. And if your net worth isn’t where you’d like it, you can take steps to improve it.
Diversity Studio/istockphoto
If you’ve used a liquid net worth calculator, or compared your net worth to the table above and don’t feel like your numbers are as high as you’d like them to be, you can do a few things to increase your net worth.
If your debt levels are high, you can increase your net worth by decreasing that debt. Get a plan for paying off credit cards, student loans, car loans, and home mortgages. Consider increasing the amount you pay on each slightly to shorten your repayment period and decrease the amount of interest you pay on these loans and credit cards.
Creating a budget is one way to keep tabs on your finances as you’re paying off debt. A money tracker app can help make the job easier.
If you don’t have an abnormally high amount of debt but want to increase your assets, you might explore making more money. If you’re still in the workforce and have the ability to make a career change, you might consider cultivating potential high-income skills that could help you command a higher salary.
If you’re retired, you could take on part-time flexible work.
Evheniia Vasylenko/istockphoto
Not that you need to compare yourself to celebrities when it comes to net worth, but it can be fun to see how the other half lives. Keep in mind that while A-list celebrities often command millions of dollars for their work, they’re usually also smart with their money. They don’t typically blow their money on sports cars and mansions (though certainly some do). Many are financially responsible, investing in multiple income streams and spending responsibly.
Let’s look at the net worth of a few celebrities.
Reese Witherspoon
Reese Witherspoon didn’t limit her career to acting. She also founded a lifestyle brand called Draper James and a media brand called Hello Sunshine. Today her net worth is about $300 million.
J.K. Rowling
The well-known author of the Harry Potter books has an estimated net worth of $1 billion, and she’s the first author in history to reach this height. Before she was published, however, she struggled financially, which makes hers a true rags-to-riches story.
Jay-Z and Beyoncé
Superstar artists Jay-Z and Beyoncé reign supreme when it comes to net worth. Thanks to touring, albums, clothing lines, movies, endorsements, merchandise, and more, the couple’s combined net worth is $3 billion.
You may not be able to match the likes of Jay-Z and Beyoncé when it comes to net worth, but knowing yours can help you make smart financial decisions for the future. To figure out your net worth, you can subtract the total amount of your liabilities from the total amount of your assets. You can also use a personal net worth calculator; some will even factor in future growth.
This article originally appeared on SoFi.comand was syndicated byMediaFeed.org.
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