The truth is you will never know…
Regardless of what you were told, or the ‘as low as’ pricing you were counting on when applying for a merchant account, the actual cost of credit card processing will catch you by surprise each time you will try to figure it out.
Once you start accepting credit and debit cards, you realize that every transaction is unique. There are 123 pages to the MasterCard Worldwide U.S. and Interregional Interchange Rates guide and endless number of rate scenarios. Visa is not much better as can be seen at Visa U.S. Interchange Reimbursement Fees guide, taking into consideration that this guide applies to transactions within the US only.
The credit card associations explain that this pricing structure is a direct result of merchants and regulators demand for transparent pricing. These demands forced the associations to reveal the complexity behind credit card processing. No one doubts the end result – no merchant can see the forest through so many trees.
What could possibly be so complicated, that requires such a complex pricing structure? The complexity exists at ‘both sides of the equation’. Merchants and shoppers (or cards) both carry different sets of risks and rewards, to which the associations relate. Fraudulent transactions are more common online than at the local grocery store. Debit cards lack the credit risk embedded within each credit card transaction. Different card types have different sets of benefits. All these, and much more, are taken into consideration when pricing the cost of processing a single transaction.
Processing a regular Visa card will cost less than processing a Gold MasterCard, which will still cost less than processing an American Express card. Merchants that process in a single step (do the authorization and capture together) will process for less than merchants who are forced to split the authorization and capture, due to physical merchandise location and delivery regulations, making them capture in delay.
And the funniest part – all of the above is the least of your concerns. As long as your merchant account provider uses an “interchange plus” basis, you’re on safe ground. The plus is the element you should negotiate and feel comfortable with. No one is big enough to get a better deal from the associations 
Gidi Argov, Founder and CEO
www.CreditCardProcessing-r-us.com
Tags: Credit Card Processing, Credit Card Processing Fees, Merchant Account
Very helpful post. Very clear commentary and suggested phrasing are most impressive, as are his and your generosity in sharing this explanation and example.
Merchant accounts are marketed to merchants by two basic methods: either directly by the processor or sponsoring bank, or by an authorized agent for the bank and additionally directly registered with both Visa and MasterCard.
merchant account for your business can be such an exciting moment. It is another of those steps that says, “Yes, this is for real.” In order to be successful in your business venture, you need to be aware of the realities behind those big steps, however. In this case, you should educate yourself about the various credit card processing fees associated with a merchant account.
Many merchants may find that they are initially quoted, and mistakenly sign-up for the wrong merchant account.
Take into consideration that when signing up for an online merchant account you will pay more than a retail account.
Most online credit card processing accounts will have a rate well over 2%. If you are quoted a rate below this number, it is likely that you have been misquoted.