Global Payments Card Processing Fees
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Global payments card processing fees are the costs which business owners have to experience while processing payments from the customers. Payment fees that are charged to a merchant for global payments card processing can be influenced by various factors like the level of the risk of the transaction, card type (business, reward, corporate, etc.), and the pricing model that the specific payment processors are using.
Normally, there is only a small ratio of people who carry cash to pay for the services and goods they are buying. However, many buyers prefer to make their payments through credit cards because it is easy to carry plastic money than carrying hard cash. Businesses that accept payment through credit cards and online payment have to face global payment card processing fees for every transaction.
Factors that Affect Global Payments Card Processing Fees
The global payments card processing fees that business owners pay for accepting credit card payments depend on several factors. These factors are:
1. Interchange Rate for Global Payments Card Processing
An interchange rate is an amount that the credit card issuer, like Mastercard, Visa, Discover, or any other charges the receiving bank every time a customer pays using a credit card. However, the purpose of taking the global payments card processing fees is to help the issuing bank for covering the handling costs, the risks associated with the online payment and to handle any fraudulent transactions that may happen.
2. Merchant Account Provider Fee for Global Payments Card Processing
When a business wants to accept global payments card processing, it must interlink the credit card network with a merchant account. A merchant account is helpful for the company to accept credit card payments. The merchant account provider needs to deposit the money to the merchant’s bank account on regular intervals.
The merchant account provider charges a small global payment card processing fees on top of the interchange fee, which depends on the transactions volume and the business type. Apart from the per-transaction fee, it can also charge a monthly fee for maintenance and an additional fee for transactions having disputes by the customers.
3. How Global Payments Card Processing Works
The global payments card processing fees depend on how the card is being processed. Customers usually make transactions by swiping their card, online transactions, over-the-phone transactions, etc.; there are different levels of risk linked with each type of transaction of global payments card processing.
The customers who make payments via swiping a card at the cash counter are less risky and thus have lower fees. However, over-the-phone and online transactions have a higher risk because scammers can use the lost or stolen cards to purchase and thus have higher global payments card processing fees.
Type of Fees Included in Global Payments Card Processing Fees
1. Flat Fees for Global Payments Card Processing
Flat fees are the payment plans used by the payment processor to charge the global payments card processing fees for all transactions, irrespective of card type, brand, or whether it’s a physical or in-store purchase. Flat fees are charged at a fixed percentage of the transaction amount for global payments card processing.
New businesses prefer flat fees because they don’t need to handle large volumes of transactions.
2. Interchange Plus Pricing for Global Payments Card Processing
By using an interchange-plus pricing plan, an interchange fee and a fixed global payments card processing fees or percentage for each transaction can be charged by the payment processor. However, interchange plans are not easy to understand as flat fees plans.
3. Tiered Fees for Global Payments Card Processing
While using a tiered fees pricing model, the processor takes the different global payments card processing fees and groups them into three different categories. It depends on the level of risk linked with each transaction. The three different tiers are:
Unified Rate for Global Payments Card Processing
To place a transaction in the qualified rate tier, it needs to meet all the processor’s requirements for processing.
Mid-qualified Rate for Global Payments Card Processing
Transactions that fail to meet all the requirements of payment processors are usually being downgraded to the mid-qualified or non-qualified tiers. Online transactions and direct mail orders where a credit card is not physically required carry a high risk of fraud, and thus, businesses pay higher global payments card processing fees to handle the risk.
Non-qualified Rate for Global Payments Card Processing
Transactions that fail to qualify for the qualified and mid-qualified tiers are counted in the non-qualified rate category. Usually, the transactions that fall under this category are reward card transactions, e-commerce transactions, and signature card transactions. The non-qualified tier charges the highest global payments card processing fees.
Why Choose Oceanpayment for Global Payments Card Processing Solutions?
Oceanpayment offers secure and reliable payment security services for global merchants as a payment gateway, especially in Singapore and Hong Kong.
When it comes to higher global payments card processing fees, Oceanpayment is a cost saving and all-in-one payment platform. Oceanpayment offers safe, reliable, flexible, and advance global payments for card processing services.
From the perspective of global payment card processors, Visa, MasterCard, American Express, Discover Card, etc., and other global payment card processors authorize major financial institutions to issue bank cards with logos for institutions, and provide forwarding and clearing services. The bank card industry is a two-sided market with network externalities. Therefore, various factors such as the intensity of competition, the level of cost, and the needs of both the supply and demand sides of the market affect global payments card processing fees, which involve the issuing bank, the acquiring institution, the card holder, and merchants.
With the rise of global e-commerce, online payment methods have become more advanced. A convenient and easy-to-use payment gateway is like a hand that collects money for you, and it is closely related to the income of the merchant. As the world’s leading global payment solution provider, Oceanpayment can help deal with online credit card payment processing, which enables merchants to easily set up an account and use it, and also helps merchants to be familiar with and trust our services.
The development of global payments card processing
The development of credit cards can be traced back to the middle of the 18th century. As early as more than a hundred years ago, in the United States, the birthplace of credit cards, Mr. Auther Morris invented the credit card advertised as “enjoy first, pay later”. However, the cards at the time were made of metal and were issued to a limited number of places, and they were restricted to certain places: for example, the petroleum credit card launched by General Petroleum Company in 1924 for company employees and specific customers was treated as a VIP card. As a means of promoting oil, it was later issued to the general public. Due to its good effect, it attracted other companies such as oil, telephone, aviation, and railway to join in, and the credit card market began to develop.
The development of global payment cards has suffered two major setbacks. The first was during the Great American Economic Panic, when many companies suffered losses due to bad debts and credit card fraud; the second was during World War II, the Federal Reserve Board banned the use of credit cards during the war. However, these could not stop the later development of credit cards. In 1951, the Diners Card came out. The embryonic form of modern credit cards gradually took shape. Cardholders showed this card when they made purchases without having to pay cash. The card company advances the cardholder’s money and asks for a merchant discount from the merchant, and then charges the cardholder monthly. Its business scope has gradually expanded from the original restaurant to hotels, airlines and other tourism-related industries and general retail shop.
In the 1950s, nearly one hundred banks joined the ranks of processing global payment cards. However, due to limited business volume, limited to local banks, no annual fees, and increased non-performing debt rates, many banks were unable to withstand losses and withdrew one after another. Only small and medium-sized financial institutions Organizations are striving to survive on the edge of profit. And these surviving banks began to seek innovation and change. During this period, banks provided revolving credit payment methods to enable cardholders to pay more with flexibility, banks also increased interest income. After that, cardholders gradually became accustomed to using revolving credit, and the booming development of credit cards began.
The progress of global payments card processing fees
Processing fees of each credit card transactions varies between different companies. The exact amount depends on the payment network (e.g., Visa, Mastercard, Discover, or American Express), the type of credit card, and the merchant category code (MCC) of the business.
Note that debit cards have a different pricing model, and they usually cost less for merchants. This is why you may only see a convenience fee for a credit card and not a debit card purchase. Those ranges include the two types of fees that payment networks charge for each transaction: interchange fees and assessment fees. They don’t include payment processing fees, because fee structures vary considerably depending on the credit card processor you choose.
Now, let’s take a closer look at the fees that get taken out of every credit card transaction:
The bank that issues the credit card receives the interchange fee. For example, if you have a Chase credit card on the Visa payment network, Chase receives the interchange fees on your transactions.
The payment network receives the assessment fee. In the example above, Visa would receive the assessment fee on every transaction where you used your Chase Visa card.
A credit card setup fee is a one-time fee charged by a credit card company when a new credit card account is opened. You may have to pay the payment processor to open a merchant account with them. This might cover a technician that comes to set up the necessary hardware, or who provides customer support for the setup over the phone.
Oceanpayment global payment solutions
Oceanpayment has long provided product and operational support payment security services for global merchants as a gateway, especially in Hong Kong and Singapore.
As fully licensed FinTech company with global digital payment technology and business qualifications, Oceanpayment has the highest level of security certification in the global financial industry PCI DSS LEVEL 1, Visa, MasterCard, American Express, Discover, UnionPay International, JCB and other certification services Merchant or acquirer qualification, Google Pay and Apple Pay PSP certification