Everything You Need To Know About Payment Processing

Payment processing is a critical part of any business, but it can be confusing and overwhelming if you’re not familiar with the ins and outs. This guide will give you a crash course in everything you need to know about payment processing, from the different types of processors to the fees involved.

Different Types of Payment Processors

There are three main types of payment processors:

1. Credit card processors – These companies process credit and debit card payments on behalf of businesses. They typically charge a per-transaction fee, plus a percentage of the total sale.
2. ACH processors – These companies process electronic payments made via bank account transfers (ACH). They typically charge a flat fee per transaction.
3. PayPal – PayPal is a popular online payment platform that can be used to process credit and debit card payments, as well as bank account transfers. PayPal charges a per-transaction fee, plus a percentage of the total sale.

Fees Associated with Payment Processing

There are three main fees associated with payment processing:

1. Transaction fees – Most processors charge a per-transaction fee for each credit and debit card transaction. This fee is typically a flat rate, ranging from $0.10 to $0.30 per transaction.
2. Percentage fees – In addition to the transaction fee, most processors also charge a percentage of the total sale. This fee ranges from 1.5% to 3.5%, depending on the processor.
3. gateway fees – If you use a payment gateway to process credit and debit card transactions, you may also be charged a gateway fee. This fee is typically a flat rate, ranging from $0.10 to $0.30 per transaction.

How to Save on Payment Processing Fees

There are a few ways you can save on payment processing fees:

1. Negotiate with your processor – If you’re unhappy with the fees you’re currently paying, reach out to your processor and see if they’re willing to negotiate.
2. Shop around – Don’t be afraid to compare rates and fees from different processors. There’s a lot of competition in the space, so you should be able to find a processor that meets your needs at a reasonable price.
3. Use a payment gateway – If you use a payment gateway, you may be able to avoid the per-transaction gateway fee.
4. Use a flat-rate processor – If you process a lot of small transactions, you may be better off with a flat-rate processor. These processors charge a single, flat fee for all transactions, regardless of the amount.
5. Use ACH processing – ACH processing is typically cheaper than credit and debit card processing. If your business is able to process ACH payments, you may be able to save on fees.

The Bottom Line

Payment processing is a necessary part of doing business, but it doesn’t have to be expensive. There are a few ways you can save on payment processing fees, so shop around and see what options are available.