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Understanding Different Credit Card Fees


While most business owners understand that a small portion of each payment processed by their credit card processor is taken out of each sale, what they often fail to understand fully is how additional fees will impact their profit margins until they receive their monthly statement.

Every time a business charges a credit card there is a single percentage called the discount rate that is taken from the transaction and a second flat fee that is referred to as a transaction fee. For instance, a credit card processing company may charge a .25% discount rate and a $.10 transaction fee (a.k.a authorization fee) for every payment that is processed. When the average cost of each sale is low, transaction fees can end up being much greater than the discount rate. This is especially true when businesses are charged multiple fees per transaction.


One of the major issues for business owners when searching for a payment processor is that payment processors will advertise their processing charges but not include all their fees. For instance, a payment processor may advertise a .25% discount rate and $.10 authorization fee per transaction as their standard breakdown of charges for a simple in-store transaction. However, hidden in the small print are all the other fees that a business can incur depending on how the sale is completed. These fees can include:

  • Per item fees

  • Communication Fees

  • Return Item Fees

  • Address Verification Fees

  • Gateway Fees

  • Wireless Service Fees

While some of these fees may be unavoidable depending on the type of business you own, not being told about them by your payment processing company is. As a business owner, it is important to research and ask your payment processor about any fees you notice on account to calculate how much revenue you are losing because of them. If your credit card processor felt the need to hide the fees from you, then you have to question how much you can trust them and whether they know you could be saving money with another company that does not hide the fees.

#Canadacreditcardmerchantaccount #canadiancreditcardprocessing #paymentprocessinginCanada

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