{"id":41499,"date":"2019-09-17T16:06:12","date_gmt":"2019-09-17T20:06:12","guid":{"rendered":"https:\/\/www.mymusicstaff.com\/?p=41499"},"modified":"2019-09-17T16:06:12","modified_gmt":"2019-09-17T20:06:12","slug":"payment-processing-fees","status":"publish","type":"post","link":"https:\/\/www.mymusicstaff.com\/fr\/payment-processing-fees\/","title":{"rendered":"Understanding Those Pesky Payment Processing Fees"},"content":{"rendered":"

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One of the big decisions you have to make when running your business is how to collect payments. And if you\u2019re going to accept online payments, you\u2019ll need to choose the payment processor that works best for you. Regardless of which one you go with, you\u2019ll be paying processing fees on your transactions.<\/p>\n

Here are some important terms used throughout this post:<\/p>\n

Interchange rate:<\/strong>\u00a0A fee charged by banks to support the cost of processing card-based transactions
\nPayment processor:<\/strong>\u00a0A company that executes the transactions (i.e. PayPal or Stripe)
\nMerchant account:<\/strong>\u00a0The account where the money will go once processed
\nGateway fee:<\/strong>\u00a0The monthly cost for using a payment processor<\/p>\n

So, how do you figure out what these payment processing fees might add up to?<\/h2>\n

First you need to understand the pricing models for each payment processor. Many processors use \u00ab\u00a0Interchange Plus Pricing\u00a0\u00bb or \u00ab\u00a0Cost Plus Pricing\u00a0\u00bb.\u00a0That means you pay the Interchange rate set by the credit card companies\u00a0plus<\/em>\u00a0the processor\u2019s advertised rate. The attractive Interchange rates they often advertise will be for basic non-premium credit cards for in-person transactions. You’ll likely find that many of your clients have premium cards (aka rewards cards, cash back cards, etc.).\u00a0For the convenience of your families and to lessen your workload, you’ll likely be accepting payments online. \u00ab\u00a0Card not present\u00a0\u00bb transactions (aka online payments) typically have an even higher rate than advertised.<\/p>\n

Here are some of the common credit card types you\u2019ll likely be accepting:<\/h4>\n\n\n\n\n\n\n\n\n\n\n
Credit Card Type<\/strong><\/span><\/td>\nInterchange Rate –\u00a0<\/strong><\/span>Card Not Present<\/span><\/strong><\/td>\n\u00a0Payment Processor Rate<\/strong><\/span><\/td>\n\u00a0Additional Fees<\/strong><\/span><\/td>\n<\/tr>\n
Visa Rewards Traditional<\/td>\n1.95% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n\n
    \n
  • One-time setup fee
    \nAnywhere between $0 and $100<\/em><\/em> <\/li>\n
  • Monthly gateway fee
    \nTypically $10-$50\/year<\/em><\/em> <\/li>\n
  • PCI compliance fee
    \nTypically $60-$150\/year<\/em><\/em> <\/li>\n
  • Other miscellaneous charges
    \nChargeback fees, monthly minimums, etc.<\/em><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Visa Rewards Signature<\/td>\n2.7% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n<\/tr>\n
Visa Rewards Signature Preferred<\/td>\n2.3% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n<\/tr>\n
MasterCard Consumer<\/td>\n1.89% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n<\/tr>\n
MasterCard Enhanced<\/td>\n2.04% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n<\/tr>\n
MasterCard World<\/td>\n2.05% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n<\/tr>\n
MasterCard World Elite<\/td>\n2.95% + $0.10<\/td>\n\u00a00.1 – 1%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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While you may be enticed by a processor offering a 1.89% + $0.10 rate, what you\u2019re not being told is that rate is only for one specific type of card. As we can see from the chart, processing all those non-qualified cards (aka rewards cards, cash back cards, etc.) could be north of 3% and this will be in addition to your monthly fees and other miscellaneous service charges. On top of that, many payment processors are charging a\u00a0monthly fee<\/strong>\u00a0just to use the service, plus\u00a0hidden fees<\/strong>\u00a0you may not even realize you\u2019re paying! Payment processors, like Stripe, have taken into account what types of cards most consumers use and factor that into their one blended rate (2.9% + $0.30<\/a>1<\/sup>) and no additional monthly or hidden fees.To figure out what the most cost-efficient payment processor is for your studio, you\u2019ll want to calculate your\u00a0effective rate<\/strong>:<\/p>\n