How Much Are Virtual Terminal Credit Card Transaction Fees Costing Your Business? While this may seem true, it helps to look at the big picture. Now, you may think that virtual credit card transaction fees aren't that much, right? It's only around 3.5% of every transaction. Given that the vast majority of virtual terminal credit card processing isn’t done in person, there’s a higher likelihood of fraud.MSPs charge a higher markup for this convenience and functioning. You don’t need a card physically present to process payments as you would with POS credit card processing.MSPAverage Virtual Terminal Credit Card Processing Fees Square 3.5% + 15¢ per transaction PayPal 3.1% + $0.30 Shopify 2.9% + $0.30As you can see, virtual terminal credit card processing will cost you more than point-of-sale (POS) credit card processing, even if you get a good deal with your MSP. However, as seen in the example below, the rates for virtual terminal processing are much higher. The amount you pay for in-person processing fees depends on the credit card network the customer uses. Fees can vary depending on the type of card presented at checkout. Usually, businesses pay lower rates on in-person transactions than they do on virtual transactions. Are Virtual Terminal Credit Card Transaction Fees Higher Than Card-Present Fees? Otherwise, you're paying fees without actually receiving any revenue. Ask your credit card processing company to waive voided transaction fees and chargebacks. On top of all that, you may have to pay fees even if the sale is voided or refunded. Many MSPs have complex multi-tiered pricing that is heavily influenced by your transaction volume, so you may also have to pay surcharges if you do not have enough transactions each month. However, the fees for virtual terminal credit card processing may not even end there, as there may be hidden additional fees. The average credit card processing fees are around 3.5%. Assessment fee: You pay this to the card-issuing brand.Interchange fee: You pay this to the card-issuing bank.Pass-through rate: The MSP pays this to the card-issuing bank.Merchant services provider (MSP) markup: Your merchant services provider is a necessary entity to process credit card payments, and it has to make money too.Your total fee (or effective rate) comes from the following fees: How Much Does Payment Processing Cost?Īlthough virtual terminal credit card processing may not cost you much upfront (if anything), you’ll pay a per-transaction fee. No matter what type of business you have, if you plan on accepting credit card payments without having the card present physically, then you'll need to have a virtual terminal. Delivery services (food, groceries, etc.).Industries where virtual terminal credit card processing is most used include: On a screen, virtual terminal credit card processing looks like this:Ī variety of businesses can benefit from virtual terminal credit card processing, especially those that do business over the phone and internet. The cardholders simply type in their card information and the payment is processed. Virtual terminals are web applications that give you the ability to process payments without a card reader (aka a card-not-present transaction). What Are Virtual Terminals, and How Do They Process Credit Cards? Here’s what you need to know about implementing the best virtual terminal credit processing system while saving on credit card transaction fees. Being mindful of transaction fees could result in thousands more in your bank account at the end of the year. These fees are required by payment processors to use their services. When comparing pricing models for different credit card processors, you need to be mindful of credit card transaction fees. A virtual terminal is used for payment processing and is required if you plan to accept credit or debit card payments. If you are venturing into e-commerce or conduct business over the phone, you want to make sure you set up a virtual terminal. As a small business owner, you want to provide customers with as many buying options as possible.
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