January 13, 2020
Written by
James Davis
Written by James Davis
Senior Technical Writer at United Thinkers

Author of the Paylosophy blog, a veteran writer, and a stock analyst with extensive knowledge and experience in the financial services industry that allows me to cover the latest payment industry news, developments, and insights. Read more

Reviewed by
Kathrine Pensatori
Product Specialist at United Thinkers

Product specialist with more than 10 years of experience in the Payment Processing Industry. I help payment facilitators and PSPs solve their various payment processing issues. Read more

Credit Card Processing Cost and Quality

Some say, low credit card processing fees is the only thing that matters when choosing a payment processor. Found a processor that offers you low fees? Immediately integrate your system with and migrate all your data to this processor’s platform! Well, not exactly. In reality, such a migration and/or integration makes sense only if its cost does not offset the savings from processing cost reduction. Of course, credit card processing cost is an important factor. However, it is not the only one to consider, when you are choosing a processing partner.

What is important, beside credit card processing cost?

Beside ease of integration and migration we have just mentioned, the processor should support a bunch of vitally important functions and features. They include flawless reconciliation logic, automated chargeback handling, sound fraud protection, batch and real-time processing, withholding of taxes, convenience, and other fees. If necessary, it should even be able to handle subscription plans and support other recurring billing-specific functions. If you are a PayFac or a PSP, you should look at functionality related to merchant on-boarding and monitoring.

Electronic payment processing entails high risk. Even more so, if you come from a high-risk industry or geography. For example, processors might deem an Indian tech support company a high-risk one, in terms of both geographical location and merchant category code (MCC). In order to offset the risks, the processor might charge more for credit card processing. If your monthly processing volume is low, then you can expect your credit card processing cost to be high. That’s because processing fees are proportional to amounts and quantities of transactions you process on a regular basis. So, if you have problems with your processing history, represent a high-risk industry or region, or process relatively small monthly transaction volume, then you, probably, cannot afford cheap processing service.

Our advice is – before running after low processing fees, carefully consider, what you are going to get for your money. There is a high chance that you will find some “free cheese waiting in the mousetrap”.

Read more about cheap processing solutions in our respective article on Paylosophy.

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