Figuring out what you're actually paying in credit card fees

The decision to integrate with Stripe was the culmination of a lot of research. The key takeaway was that small businesses need to educate themselves before selecting a processing partner.  For example:

• Most small businesses pay more in processing fees than they think they do
• Credit card fees are typically broken down into an "interchange" fee and other charges
• The interchange fee is at least 2% and credit card companies imply that's the "rate" you pay
• Most credit card processors, however, make money on their "other" charges
• Because of this confusion, many small businesses pay up to 4% in monthly fees without knowing it
• The cost “rewards” offered by credit card companies to their customers is often passed on to merchants in the form of higher interchange fee or additional charges.
• There is no standard set of monthly fees so it's very difficult to compare fees among processors

So how do you confirm how much you're actually paying?  Divide your total monthly processing fees by your monthly payment volume (how much you charged your customers).  Here's where it begins to get complicated since "annual" charges also need to be included in this calculation.  Other fees include monthly fees, PCI compliance fees, annual fees, merchant account fees, connection fees, etc.--the numerous different fees depend on the processing company and, confusingly, all have different names.  This opacity--the difficulty of gaining a clear understanding of fees--is why so many small businesses pay more than they think they do.  In fact, after making the calculation above many small businesses are shocked to learn that despite being promised fees of, say, 2%, they're actually paying closer to 4%.

To ensure transparency in pricing, we decided to partner with Stripe since they only charge a flat fees with no other monthly or annual charges regardless of the type of card your client uses (Visa, Mastercard, Discover, Amex, Debit, Credit, a rewards card, etc.).