Credit Card Processing Glossary
General: Credit Card Processor
Processors mark up the price of credit card processing more for small businesses because they have less bargaining power and are not as well informed. Each year credit card processors collect about $7B of fees from merchants on top of the interchange fees collected by the credit card issuers and visa and mastercard.
To accept credit cards a merchant must sign a contract with a credit card processor. In return, the processor provides access to one of the processing networks over which the transactions actually flow. The processor is also responsible for customer service and billing the merchant.
There are some very large processors, like First Data, that own their own processing networks. There are also many smaller processors (in the industry lingo they are called ISOs) that contract with the larger processors to use their networks.
Each business negotiates the processor's markup independently, so the amount of this markup depends on the situation and the negotiating power of the business. Generally smaller businesses face higher rates than larger businesses.
What is the best way to save money on your Credit Card Processing?
