Credit Card Processing

What Are Credit Card Processing Fees?

The modern world of commerce has already shifted to digital payments.

During the 12 months leading up to October 2021, over 25% of US consumers opened a new credit card—a significant rise from 15.7% one year prior and consistent with pre-pandemic figures as revealed by data from The New York Fed.

With this spike in credit card usage, it’s crucial to understand credit card processing fees as it impacts your business’ bottom line.

But ever wondered how these fees are calculated and what they cover?

Especially if you’re a business owner in high-risk verticals, credit card processing fees tend to be higher than those of low-risk businesses.

Credit card payment processing fees are unavoidable in business, but they don’t have to be a burden. Understanding these fees and how they can impact your bottom line can help you maximize profits as a merchant.

In this guide, we’ll help you get to grips with what credit card processing fees mean for your high-risk business. We’ll share valuable insights into how to lower your credit card processing fees using high-risk payment processors.

What Are Payment Processing Fees?

Credit card processing fees are the costs for accepting card payments or other electronic payments. These fees typically comprise two components: an interchange fee and a payment processor fee

Merchants may also incur other types of fees, such as regular subscription fees, statement fees, service fees, chargeback fees, credit card surcharges, equipment rental charges, or setup/activation fees.

These fees can range from 2.87% to 4.35%, and this doesn’t include any merchant service provider fees. It’s important to note that these charges can add up quickly, reducing your profits and potentially impacting your business’s bottom line. 

Those operating in higher-risk verticals or industries are likely to face even higher processing fees that may put a strain on their finances. Therefore, small business owners need to take the time to research potential processing fees and compare prices among different credit card processors.

How Do Credit Card Processing Fees Work?

Credit card processing fees are a necessary evil in running a business. But understanding how credit card processing companies work and additional fees can help you maximize profits.

Here are the different types of credit card processing fees and how they’re calculated.

Interchange Fees 

Set by the card networks like Visa, Mastercard, Discover, and American Express, interchange fees are calculated as a percentage of each transaction plus a flat fee.

Interchange fees cover costs associated with verifying the transaction—such as authorizations and fraud protection—and serve to incentivize banks that issue the cards to keep offering them. 

These fees range from 1.5%-3% of each transaction. 

Payment Processor Fees 

The payment processor fee is compensation for hosting and maintaining the technology used to secure transactions. 

Payment processors charge fees to—well, process payments—and facilitate transactions at a flat rate or based on transaction volume. These fees include monthly, per-transaction, equipment lease, and statement fees

Depending on the payment processor, these costs can range from a few cents to a few percent of each transaction. 

Assessment Fees 

Assessment fees in payment processing are small yet important charges applied to credit card transactions. Typically, these fees amount to a percentage of the total transaction value. The major credit card networks set and charge them.

Factors such as card type (credit card versus debit card), types of transactions, and transaction volume can affect the rate at which these assessment fees are charged.

Additionally, foreign transactions may incur extra costs due to currency conversion or other factors.

Payment Processing Pricing Structures 

You can use several strategies to reduce your rates, such as shopping around different payment networks or negotiating rates with current providers. You can also consider various pricing structures and decide which will work best for your business.

Flat-Rate Pricing

Flat-rate pricing is a payment processing model that allows you to pay a fixed fee for each transaction. This fee includes interchange fees, card brand fees, and the processor charges or own margin fees.

This structure can benefit businesses that want the predictability of their monthly costs, making budgeting easier. But if other variables could lower your interchange rate, you may not benefit from those savings with a flat-rate pricing structure.

Additionally, processors may charge a flat monthly fee in addition to their per-transaction fees, which can increase your overall costs without adding additional processing services or benefits.

Tiered Pricing

Tiered pricing is a popular payment processing structure among merchants in high-risk verticals and industries.

This structure offers merchants a discount rate under the “qualified” tier. But they will need to pay higher fees for transactions outside that tier.

This pricing model allows businesses to enjoy low rates on only certain cards or transactions while paying higher fees for other types, such as rewards cards.

Additionally, the non-qualified tier may also include higher costs based on features such as transaction size and frequency.

With tiered pricing, even though the qualified rate may seem attractive initially, it usually only applies to a small fraction of transactions. For this reason, merchants should carefully weigh the cost implications before deciding if tiered pricing is right for them.

Interchange-Plus Pricing

Interchange-Plus pricing is a payment processing model that provides businesses with the most cost-effective way to process payments. It offers you lower interchange rates and the ability to predict your fixed fee.

Interchange-plus pricing lets you budget more accurately and get better value for money. It usually works best for businesses in high-risk verticals and industries like retail, e-commerce, hospitality, and travel. It reduces their risk of unexpected costs.

The processor’s fee will depend on monthly transaction volume, industry sector, and processing history.

Membership or Subscription Pricing

Membership or subscription pricing structures are handy for businesses in higher-risk verticals and industries. This type of payment processing offers a fixed monthly fee with an additional charge per transaction—meaning that overall costs may be lower than with other models.

However, when considering this type of pricing, consider the number of transactions and business volume, as it may not always result in savings. And while the processor won’t charge you a percentage-based markup, you will still have to pay the membership fee.

Lower Your Processing Fees With Von Payments

If you’re a business owner in a high-risk vertical or industry looking to reduce your processing fees, you’ll benefit from Von Payments and its Zero-Fee Processing Program.

These PCI-compliant and comprehensive solutions help you avoid the typical interchange and assessment fees charged by most processors and eliminate any additional processing costs that would otherwise be incurred.

Furthermore, Von Payments provide high-risk merchant accounts, so you won’t have to deal with higher processing fees from issuing banks and credit card issuers that perceive your business as having greater risk exposure.

With Von Payments, you’ll save up to 10x on credit card transactions and other digital payments, freeing up capital that can be used for other significant investments.

Plus, Von Payments uses advanced technologies such as tokenization and fraud protection tools to ensure your customers’ highest level of security.

Sign up today to take advantage of these savings!


Credit Card Processing

Cash Discount Credit Card Processing

Cash Discounts in Credit Card Processing

Cash discounts help small businesses save money on credit card processing fees. By offering a cash discount, merchants can lower their prices for customers who choose to pay in cash—a win-win situation that results in cost savings for everyone.

A cash discount program works for the merchant as it incentivizes the customers to pay cash. If they still choose debit or credit card transactions, a 3-4% service fee is added. This offsets the merchant’s card processing fees.

With Von Payments, businesses can save on payment processing costs from card brands like Visa and Mastercard while offering discounts to customers spending with cash.

Our easy-to-use platform lets you quickly set up discounted pricing for cash payers, saving you money from day one.

The Zero-Fee Card Acceptance program helps reduce transaction fees by providing dual pricing options—cash or credit/debit card. You won’t have to worry about calculating the difference in cost.

Plus, our PCI-compliant point-of-sale or POS system and terminals are designed to work wherever your business is located—whether it’s a physical store or online.

Benefits of Having Cash Discounts

A cash discount avoids the cost of processing credit card payments. It encourages customers to use cash or checks instead of credit card or debit card transactions

At the same time, it also makes them pay earlier than with a card. 

As a merchant services provider, you benefit from a cash discount by reducing late payments while offering customers flexibility in payment methods.

  • Cash Is King – With a cash discount, merchants avoid high credit card fees—especially for businesses without a high-risk merchant account. And as an added bonus for your clientele, a discounted cash price awaits if a customer pays without using a card!


  • No Fees – A cash discount lets businesses pass their merchant processing costs to buyers. This means they don’t have to pay additional fees (i.e., merchant service fees, surcharge fees, service charges, and credit card processing fees)for accepting payments via card.


  • Keep More Money – Cash discounts help business owners keep more of their hard-earned money, as the merchant receives an immediate cash payment, usually at a discounted rate. This helps businesses by reducing processing costs, getting payments sooner than card transactions, and avoiding costly chargeback fees.


  • Clear Verbiage – Clear verbiage helps customers understand the difference between payment options and cash discounts. By clearly detailing different payment options and their associated discounts, you can encourage customers to take advantage of your cash discount option—ultimately saving you money in the long run.

How Does Cash Discount Processing Work?

  • Easy To Operate – With Von Payment, taking payments from customers has never been easier! Its intuitive design and user-friendly interface simplify processing transactions for even the most tech-challenged business owners.
  • Cut Costs Where It Counts – You can increase your profit margin with Von Payment’s cash discount feature. Avoid paying credit card processing fees while offering a cash discount to customers who pay with cash! Cut costs for your business, get happier patrons, and enjoy more money in your pocket!

  • Save Money On All Payment Types – Customers who pay with cash will receive a discount, and you—the merchant—can skip those costly credit card processing fees.


  • No SurchargeWith Von Payment’s cash discount feature, you can avoid the dreaded credit card surcharge fees when customers pay with credit cards. By offering a discounted price to those who use cash, you can reduce processing costs from your payment processor and eliminate any surcharge program.


At Von Payments, we quickly set up custom discounts tailored to your business needs without additional cost or effort. Our zero-cost solution helps you reduce fees from credit card processors, saving you money with every purchase.

Cash discount programs can help businesses attract bargain-seeking customers, increase their cash, and manage accounts receivable more efficiently.

With our simple setup process, you can immediately take advantage of these benefits.

Take control of your finances today with Von Payments’ cash discount program!

Get in touch now and see how much you can save!


Credit Card Processing Payment Processing

Low-Fee Credit Card Processing: What To Know

Credit card processing fees can quickly add up and eat into your profits, which can be an unnecessary expense for small businesses.

Credit card companies like Visa, American Express, and Mastercard apply processing rates that range from 1.5% to 3.5%.

At the same time, it’s also hard to find the best credit card processor that offers low fees. And while there are a few options available in the market today, not knowing what to look for can take up a business owner’s valuable time.

This article will walk you through the benefits of low-fee credit card processing and how to find a suitable processor for your business. Discover the low-cost options for small businesses that want to save on credit card processing fees through low rates and no hidden fees.

What Is Low-Fee Credit Card Processing and How Does It Work?

Low-fee credit card processing allows businesses to accept and settle in-store, online, and mobile payments with credit cards while paying much lower fees than traditional merchant accounts. This type of processing helps businesses save money on payment processing costs, allowing them to keep more revenue from their sales.

Credit card processing fees can vary depending on the type of credit card used, the merchant category code (MCC), and the transaction type. These fees can add up for small businesses and eat into profits. Low-fee processing can reduce these costs by offering lower rates for specific credit card transactions.

Low-fee credit card processing typically works by using an intermediary that aggregates transactions from multiple merchants, reducing the fees for each transaction.


Benefits of Low-Cost Credit Card Processing

When accepting credit card payments, low-cost credit card processing offers many benefits—making it an attractive choice for small and medium-sized businesses.


Avoid monthly fees: With low-fee credit card processing, businesses can avoid expensive monthly fees that can quickly add up and eat into their profits. Low-fee credit card processing saves companies money from hidden fees and additional charges.


Freedom to adjust pricing for your product/service: Low-cost credit card processing gives businesses the flexibility to change their pricing structure and tailor it to the cost of their product or services—enabling them to maximize profits and reinvest more into their business.


Security against invalid charges: Low-fee credit card processing provides an added layer of security, as you will only be charged for legitimate purchases made with valid cards. This shields your business from invalid and fraudulent charges. Some credit card processors offer fraud protection, chargeback management and prevention, and dispute resolution tools.


Invest more into the business: Low-fee credit card processing helps businesses save money on payment processing fees. This enables them to reinvest more of their profits back into their business.


Types of Businesses That Work Well With Low-Fee Processing 

Certain types of businesses are more inclined to use low-fee payment processing solutions.


High-risk merchants are particularly well-suited to take advantage of low-fee payments. They include those with high chargeback fees or greater exposure to fraud, such as:


  • Adult entertainment
  • Nutraceuticals and supplements
  • Travel and tourism
  • Subscription-based services
  • CBD
  • Vape and e-cigarettes
  • Debt consolidation


Because high-risk businesses carry more risk than low-risk merchants, many traditional payment providers shy away from them or charge higher fees.


Low-fee payment providers recognize the need for high-risk merchants to access reliable payment services and offer lower transaction fees.


Small businesses benefit significantly from the cost savings associated with low-fee payment processing.


For small business owners operating on tight budgets, reducing their merchant account fees can significantly improve their profit margins while still providing customers with a convenient way to pay via credit cards, debit cards, and other digital wallets.

What to Look For in a Low-Fee Credit Card Processor

When looking for a low-fee credit card processor, there are several important factors to consider to ensure you get the best service and value for your money.


Some processors offer competitive rates, while others have hidden costs or additional fees such as:

  • Interchange fees (sometimes referred to as interchange rates) are charged by a credit card issuer (bank or other financial institution) to process and complete a transaction.
  • A payment processor charges service fees for providing credit card processing services.
  • Many processors charge set-up fees for setting up a merchant account and providing related services.
  • Credit card networks charge assessment fees, typically a percentage of each transaction.
  • PCI compliance fees cover the costs associated with ensuring your business meets PCI standards
  • Termination fees are charged by some processors when a merchant account is closed.

Choose low-fee payment processors with transparent pricing and options for flat-fee structure instead of tiered pricing models or interchange-plus pricing.

Additionally, review any contract cancellation fees before signing to avoid any surprises down the line.

Point-of-Sale Requirements

Understand what equipment is necessary to process payments. Assess how user-friendly the point of sale or POS system is for customers.

Research different payment terminals and their capability levels, i.e., whether you’ll need additional software (e.g., virtual terminal) or hardware (e.g., credit card reader) to get up and running quickly.

Evaluate how easy they are to use for either card-present or card-not-present (contactless) transactions. Can they quickly and securely process in-person transactions and online payments? Do they have smooth integrations with payment gateways like Square, Stripe, and PayPal?

Setting Up Surcharging

Find out if you can set up surcharging with your chosen provider to pass on credit card fees directly to cardholders. This can be especially helpful for businesses that experience high transaction volumes.

Whether It Fits Your Business Type

Understand whether the credit card processing company provides the necessary services for your business type. Are you in a high-risk industry? If so, you’ll need a processor with a track record of working with high-risk businesses.

For example, industries such as cannabis may require special licensing from state governments for payment processing to occur legally.

Businesses should double-check this before signing a long-term contract with a credit card processor.

Get Zero-Fee Processing with Von Payments 

Von Payments provides a zero-fee credit card processing solution for small businesses and startups, helping them reduce business costs.

With Von Payments, your business can accept all types of payment methods without paying additional fees—all while enjoying the same secure and reliable service as larger companies.

Enjoy reliable high-risk merchant services, fast and easy approvals, no requirement for credit history, and knowledgeable customer support. You can sleep soundly at night, knowing that each customer transaction is handled securely and efficiently.

Contact us to make your e-commerce business more profitable today by switching to low-fee credit card processing with Von Payments!