Online Credit Card Payment Processing – Lower Card Rates

Credit card payments are an integral part of every business, irrespective of industry. According to Travis Credit Union, over 59% of consumers prefer to make payments via credit card or debit card. If your business doesn’t accept credit card payments, you might lose potential customers. That is why you should consider hiring an online credit card processing company.

Whether you are a restaurant or retail store owner, Lower Card Rates can help you process any kind of payment you want. We offer your customers the flexibility to make payments in-person, online, or via any mobile device in a hassle-free manner.

What Is Credit Card Processing?

Credit card processing refers to a multi-step process required to complete credit card payments. Businesses can securely accept payments made via credit cards, debits, or even loyalty cards. 

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Who is involved in Credit Card Processing?

The following entities are a crucial part of securely online credit card payment processing at the point of sale (POS):

  • Consumer: The person making the purchase or cardholder
  • Merchant: The business owner or the one who is selling the products or services to its customers.
  • Payment gateway: A payment gateway is a system that reads and transfers payment information about the customer to the merchant’s bank account. It is responsible for capturing the data and ensuring funds are available, and the merchant gets paid. 
  • Payment processor: Also known as a credit card processor, it acts as the mediator between the merchant, credit card network and bank of the cardholder and manages the credit card transaction process. Lower Card Rates can help you authorize credit card transactions and ensure that the funds are successfully transferred to the merchant’s account.
  • Card Network: It refers to the brand of credit cards responsible for setting interchange/assessment fees and standards for PCI DSS. It includes American Express, Visa, Mastercard and Discover. 
  • Issuing bank: As the name suggests, the issuing bank is the one that issues the card to the consumer. Helps to determine whether the consumer’s bank account has the funds to process the payment. And if yes, the bank will release those funds to the merchant’s bank account.

Acquiring bank: Acquiring merchant bank holds the business funds and receives funds from transactions while allowing the merchant to accept payment with the right card reader.

What Does Credit Card Processing Cost?

When a customer makes a payment via credit card, the credit card processor charges a fee for the transaction. So, the cost of online credit card processing may vary from processor to processor, comprising wholesale costs and markup costs. 

The amount charged by the issuing bank and the card network is known as the wholesale fees or interchange fees. On the other hand, credit card processors and the payment gateway charge markup fees. Therefore, depending on your processor, you may save on markup fees.

There are different types of credit card processing fees – interchange fee, assessment fee, and processing fee. 

    • Interchange fee: When customers use their credit cards to make payments, the merchant’s bank account has to pay a fee to the card-issuing bank, which is known as an interchange fee. This fee is non-negotiable and covers fraud and bad debt costs, handling costs, and the risk involved in approving the payment.
    • Assessment or service fee: Another non-negotiable fee is the assessment fee, but this fee is charged by the card network. This fee is usually affected by the number of transactions and risk levels calculated by the card networks.
    • Markup or processing fee: This is the fee charged by the payment processor. It is also known as a markup fee and varies with the processor.

Types Of Payment Processor Pricing Models

Since the payment processor charges a certain amount of fee for each transaction, you can leverage a variety of pricing models, such as:

  • Flat rate: No matter whether you have a card present or not during your transaction, the processor will charge a fixed amount of fee for all card transactions. Remember that card-present transactions have a lower fee than card-not-present transactions due to the less chances of risk involved. 
  • Tiered: In this fee model, the processor will charge the fee depending on the card type, level of risk associated with transactions, and volume of transactions. 
  • Interchange plus: It is the most cost-effective pricing model. In this method, the processor charges a percentage of the transaction and a fixed per-transaction fee. As a result, the wholesale fee and markup fee are both separated.

Subscription: In the method, the processor charges a flat fixed amount every month as a service fee along with a small per-transaction fee.

Selecting The Right POS System

The Point of Sale (POS) system is the place where physical or digital transactions occur. It is a combination of hardware and software that businesses use to make and accept payments. It aids in various business management operations, including reporting, inventory, employee and customer management, etc. Remember that a POS and online credit card processing system both are different. An online credit card processing system is the component of the POS System.


What to consider when choosing a POS system?

Your credit card processor or POS system is equally important as the banks for a business. Regardless of the business type and size, your POS system must be secure, reliable, and cost-effective. So, how to choose the best credit card processor for your business? Let’s check out the things to consider when choosing the POS.

Cost: Since there are different pricing models for online credit card payment processing solutions, it is vital to understand that the pricing model that suits other business owners will also be ideal for your business. While it can be challenging and time-consuming to choose the specific processor and pricing model, it is recommended to take your time to understand your business needs and what is included in the pricing model. This will help you make an informed decision.

Security: You can’t afford to risk the credential details of your customers and leave some loopholes for hackers. So, you will need a processor that allows your customers to make payments without worrying about any cybercrime. So, choose a processor that provides ample security and has PCI and EMV compliance.

Merchant services: Merchant services are the different services and tools businesses rely on to accept and process payments via debit and credit cards and other electronic payment methods. Before you choose your credit card processor, make sure you choose the ideal merchant service provider for your business transactions.

Customer support: Like your customers are the real investors for your business; you are the real investor for the credit card processors. So, the reliable processors will provide outstanding customer support services. However, not all processors are created equally. So, make sure you choose the one with good customer support that allows you to communicate with real people who have the right knowledge of the company’s products and services.