North American Bancard Blog

Credit Card Companies and Hidden Fees: What to Look For

Posted by Brooke Tajer on

Not surprisingly, one of the top reasons startups and small businesses fail is because of a lack of capital. A survey of 100 entrepreneurs and company founders by Fast Company found running out of cash was a significant factor in failure. If you’re a merchant that accepts credit cards from customers, avoiding non-transparent, hidden fees from credit card companies is crucial to minimize additional, unexpected costs as you process transactions.

According to the National Retail Federation, swipe fees are among the highest costs that retailers cite, in addition to wages and employee health benefits. Avoid having to pass on the costs you incur from credit card processing to customers by raising up product or service prices. Know that many of these fees are ones that businesses often charge, but you should always know this upfront. Be aware of credit card companies and hidden fees before getting locked into something that hurts your business.

Fees to Get Started

Some credit card processing companies will charge merchants a fee when first starting to work with them. You may think you’re signing up for the ability to process cards immediately, but your bill will include the cost of signing on the dotted line with a company. Startup fees can range from having to pay just to apply with a company, to securing the agreement you desire for your business.

Equipment Fees

In order to process credit cards, you’ll need the right equipment to get the job done. This type of equipment may include tablet and smartphone readers, point-of-sale devices, or processors attached to desktop computers. Depending on how many sales associates you have who will be processing credits cards at your business, these equipment costs can add up.

Ecommerce Fees

If you want to accept credit card payments online for your business in a secure virtual terminal, the merchant services provider you’re processing cards with may charge fees to get set up online. Ecommerce growth is outpacing total retail sales growth, with ecommerce sales in the United States expected to increase up to 12 percent in 2017, according to Business Insider. For merchants that would like to expand their offerings online, some merchant services providers may charge web transaction, or payment-gateway fees.

App Fees

Related to ecommerce costs demanded by some merchant services, businesses that want to offer a payment app to their customers may incur an additional fee. Some credit card processors may offer a free mobile phone swipe reader to businesses, but then include a fee for the use of the app that is required to enable the swipe reader capabilities.

Multiple Payment Fees

In addition to charging fees for accepting credit card transactions, some processors will charge additional fees for debit card acceptance and/or check acceptance on the same terminal. Your business may not anticipate needing the capability to process certain types of transactions when you sign up for merchant services, or you may decide to change payment direction in the future. If your offerings expand, you may get charged fees. Additionally, some credit card processing providers will charge different fees depending on the device the charge occurs on. The amount and credit card type may be the exact same, but you could be charged much more for mobile or ecommerce transactions.

Monthly Maintenance Fees

Monthly maintenance fees are common for credit card processors to charge as they’re constantly working on improving processing apps and software through updates and keeping businesses secure. Expect companies to mention and to charge this fee, but be wary of ones that aren’t so upfront about it. Always know exactly what you can be charged for.

Cancellation Fees

Cancellation fees make sense when you’re working with a credit card processor plan that offers you a low monthly rate or free equipment, and you plan on doing business with the processor long term. Some processors may offer zero flexibility, though, and charge you a cancellation fee regardless of the plan you decide to get, which may restrict your ability to test a company to determine whether they’re the best match for your business. If you decide to leave your current processor, make sure you find a new one that will help you pay the cancellation fee, like North American Bancard does.

Reporting Fees

The transactions you process can provide your business with rich customer data that informs everything from strategy to product development to marketing efforts. Some credit card processing companies will offer robust reporting options that give you insight into purchasing trends and customer demographics, but only if your business is willing to pay for them.

EMV Chip Acceptance Fees

Accepting EMV chip cards is vital for merchants, as EMV chip card possession has steadily risen in the United States since 2015 and chip-on-chip transactions are up 359 percent year-over-year for Visa, Business Insider reports. Fraud disputes that occur when a consumer has an EMV chip card but the merchant does not have an EMV chip card-enabled payment processor places liability on the merchants. If you want to upgrade your equipment with your credit card processor to accept EMV chip cards, some providers may charge a fee.

Get a Payment Processing Provider That’s Simple and Transparent

There are dozens of other possible types of extra hidden fees you may not anticipate when you’re considering a credit card processor. From being charged when you submit a batch of transactions, to being charged to meet Payment Card Industry (PCI) standards, to being charged for address verification service, enabling the ability for your business to accept credit card payments can lead to costs that drastically affect your profits.

Payment processing can get complicated quickly. The retail landscape is constantly changing in each industry, and as your business evolves, you don’t want to have to pay extra fees simply because you’re growing. At North American Bancard, we offer free equipment and analytics, low rates, PCI-compliant transactions, free customer service, and no hidden fees. You can get set up quickly after you apply, so you can start accepting payments in-store, on mobile, and on the web with no hassle or stress about having to worry about hidden fees. 

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