May 8, 2018 | Credit Card Processing

Credit Card Transaction Charges and Processing

Do you want to know about the processing of credit cards and the credit card transaction charges, which accompany a transaction taking place between a merchant and buyer of a good or a service? If yes, then continue reading to know more about it.

How does a credit card gets processed?

A credit card network makes various transactions take place between a merchant and seller ora buyer. In just a few seconds, the transaction gets processed, and the amount gets transferred from one bank account to another. It is a complex network of various parties attached to it. Also, it accompanies some credit card transaction charges. All the key players for a credit card transaction to take place are mentioned below in detail:


The person who holds a credit card with him/her is a cardholder. Such a credit card is issued by a bank or any card-issuing financial institution. This card needs to be presented to the merchant for making the payment for a good or service purchased.


In technical terms, a person who is the seller of any good or service is known as a merchant. But as we are talking about credit cards, so a merchant is a person who accepts a credit card to make a transaction possible. For this, the merchant has to pay some credit card transaction charges.

Acquiring bank or the merchant’s bank:

A bank is a member, which is registered with the card association, like MasterCard or Visa, and is known as Merchant’s bank or Acquiring bank. Such a bank makes a contract with the merchants for the creation and maintenance of accounts, which allow a merchant to accept a credit card.
Merchant banks also provide a merchant with the software and equipment to be able to accept cards. Apart from that, they take care of the customer service or any other aspect involved in the acceptance of a credit card. The bank also transfers the funds into a seller’s account when a sale takes place.

Issuing bank or the cardholder’s bank

As the name suggests, the bank, which has issued that card to the credit cardholder, is an issuing bank. That bank is also related or associated with the associations of a credit card, like MasterCard and Visa. The issuing bank pays the acquiring bank for the purchase transaction made by the cardholder. However, it is a responsibility of the credit cardholder to pay back the amount to the issuing bank.

Processing cost

Credit card transactions charges include the processing cost which includes fees and rates. The fees include the charges you pay to the processor for maintaining your account. Rates indicate the charges you shell out for every transaction.

Discount rates and transaction fees

Credit card transaction charges are usually made of just a discount rate or a sum of fees for each transaction and discount rate. Discount rate indicates a percentage of every transaction, while the fee per transaction is a fixed amount you pay every time you make a credit card sale. This is independent of the amount of purchase. The discount rate and fees per transaction include the following costs:

Interchange Rate

This is a variable rate that is based on the card type used by your customer. This forms a major part of the discount rates charged by the processor. The credit card issuing bank is the beneficiary of this cost. The cost is not negotiable and is an amount that is fixed by the major credit card brands. Usually, the rate is published on the card brands’ websites in the form of rate tables.

Assessment charges

This also belongs to the credit card transaction charges that you have to pay to your provider. This is also not negotiable, and every card processor will pay a similar amount. The rate variation is based on the card brand used by your customers like Visa or Mastercard. Examples of the credit card transaction charges for assessment include NABU (Network access and brand usage) fees for Mastercard and APF (Acquirer Processing Fee) for Visa and the data usage fee of Discover.

Processor charges

This is the variable part of the discount charges. Instead of being fixed by the card brands, this charge is determined by the company that processes the credit card.

Credit card processing prices

Most of the processing companies provide three major pricing types for merchants to estimate the credit card transaction charges they have to pay. These include:

Interchange Plus

This is also known as cost-plus pricing model. It adds a fixed percentage over the rate of interchange in every transaction. The added percentage is the payment taken by the credit card processor. This is a transparent pricing model that indicates the exact cost percentage you are paying to your processor irrespective of the card type and the method of card processing used. This is a preferred choice for many businesses, as it is a cost-effective choice for small businesses.

Flat rate

This is usually charged by mobile credit card processing providers. You may have to pay a higher percentage for the normal debit cards than with a premium credit card. For businesses that register only a small sale volume, this is an ideal choice.

Flat rate and fee per transaction

Some processors use fee per transaction and flat rate. The percentage they take is lower than the plain flat rate charges.  
If you are a merchant, you can use Swype Fast to reduce the credit card transaction charges. By reducing such payment, you can save up to quite an amount of money. Such charges decrease the profits of the merchants as their share gets reduced.
With zero fees for credit card processing, Swype Fast is helping a lot of industries to grow. Apart from that, you can also use Swype Fast to receive a capital advance for your business. You will receive the cash within 48 hours of your application for the capital. So, try out Swype Fast for saving your credit card transaction charges.

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