To accept credit and debit card payments, every business must first:
Outlined below are the key products necessary to facilitate payments today.
The most basic method of card payment acceptance involves using a terminal tied directly to a cash register or Point-of-Sale (POS) system.
Most payment terminal solutions also include built-in scanners and printers.
A POS system incorporates the requisite hardware and software to accept card payments. Some also include basic business management solutions all in one.
Some POS solutions come with basic business management software already installed. Depending on the platform, you may be able to customize your payment environment to meet your specific needs.
Mobile Point-of-Sale (POS) solutions allow merchants to process credit card transactions on the go – whether customers wish to swipe, dip, or tap their plastic:
Merchants can use virtual terminals to process credit and debit card transactions from a desktop or laptop. Most virtual terminals are offered as software or web-based solutions that integrate with a Point-of-Sale (POS) system.
Virtual terminals are very useful if your customers routinely place orders by mail or phone.
Customers can buy your products and services online if you set up either:
Many end-to-end eCommerce platforms also allow you to create and manage your online store entirely from a single dashboard.
Working together, banks, processors, and card networks help merchants provide their consumers with seamless and secure payment experiences.
To cover these costs, merchants must pay card fees for every transaction. These charges are then distributed appropriately to the:
Below are the two most popular types of payment transaction charges that merchants must pay when accepting credit cards.
Interchange card payment fees are what the cardholder’s bank (“issuing bank”) charges the merchant’s bank (“acquiring bank”) when processing card transactions.
Established by the card brands, this fee is automatically deducted from the total sales amount, and includes both:
The acquiring bank pays the issuing bank the total interchange fee. However, the exact size of these card payment charges can vary, depending on:
The processor and the card network may apply additional card payment charges on top of the interchange fee.
$100 sale at an apparel retailer*
|10¢ levy + $2.00 fee (2% of total sale)
|15¢ levy + .80 fee (.08% of total sale)
|Pre-paid Debit/Gift Card
|15¢ levy + $1.15 fee (1.15% of total sale)
*Example shows estimated card payment fees based on simplified 2018 rates. Additional factors may impact these charges.
Many acquiring banks tack on additional card payment charges to cover:
Banks often use different card payment fee structures, with variable, bundled, and flat rate options being the most popular. This allows you to choose the most appropriate fee schedule for your specific needs.
In 2010, Congress added the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act to help resolve an ongoing dispute between major banks and merchants over debit card processing fees.1
The amendment took power away from the banks by setting limits on the debit card payment fees that banks could charge merchants.
The key goal was to regulate card payment charges as a way to help merchants reduce costs and, in turn, offer lower prices to consumers.
The amendment has effectively saved many merchants money. Yet those who regularly process debit transactions under $10 have seen costs rise since the card payment fees charged no longer vary based on the transaction amount.
In addition, consumers didn’t necessarily benefit from this amendment, because:
1 “Durbin Amendment,” Investopedia