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Three Factors That Influence the Credit Card Processing Costs For Each Transaction

You’ll need to factor your credit card processing costs into your budget when accepting these cards. But the average credit card processing fees surrounding each deal will vary. There are three points that can impact the unique credit card processing costs you’re going to manage.

What Is Your MCC?

The first factor is the one you won’t be able to adjust as much. That factor is your Merchant Category Code or MCC. The MCC is a four-digit designation surrounding whatever your business sells.

Every business has a distinct MCC based on what it offers. A tile setting contractor will have the MCC of 1740, for example.

Some businesses have extremely specific MCCs. American Airlines has the MCC 3001 all to itself, while British Airways has a code of 3005.

Your MCC will influence your credit card processing costs based on the risk associated with your business. Some businesses like drugstores, direct marketing companies, and gaming-related entities will have MCCs listed as high-risk ones. Their average credit card processing fees will be higher than what most other businesses will spend.

You may be eligible to request a different MCC if you provide enough details surrounding what you sell. You can provide details on whatever products you sell to qualify for a low-risk MCC. But you might not get information on how much you’ll spend surrounding your MCC until you get your next statement over what you’re spending on card transactions.

The Type of Card That the Customer Uses

The credit card processing costs you’ll spend will also change surrounding whatever card your customer uses. There are multiple factors to note here:

  • A credit card with a reward program will cost more to process. The card company will need to recover some expenses surrounding that reward scheme.
  • The card network can also make a difference. American Express cards cost more to process than Visa and MasterCard cards, for example.
  • Debit cards won’t cost as much to process due to them not being as risky.

Is the Card Swiped or Keyed?

The way how you collect card data can also make a difference. The average credit card processing fees you pay will be lower if you swipe a card. It can be about 1.5 to 2.9 percent on average when you swipe the card. The customer is on hand to complete the transaction, providing a reduced risk.

You could also key in the card data if the customer doesn’t have a physical card on hand. You’d require a CVV code or another identifying number when entering in the card data. The average fees can be 3.5 percent or greater for these card transactions. The card isn’t on hand at the time of the purchase, thus making it a riskier endeavor.

All three of these factors will influence what you will spend on credit card processing costs. Be sure to note the unique charges you’d experience surrounding whatever transactions you handle the most. You can learn more about these processing charges if you look at your MCC and the various cards you accept.

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