Video summary
Credit card processing fees are an inevitable part of running a business, but they do not need to remain a mystery or silently erode profit margins on every sale. These fees generally consist of interchange charges paid to the issuing bank, assessment fees paid to the card network, and processor fees charged by the payment provider to facilitate transactions. Before switching providers, it is crucial to understand these components and the specific pricing models involved, such as flat rate pricing or interchange plus pricing. While interchange plus pricing allows underlying costs to vary based on card type with a processor markup added, flat rate pricing offers predictable published rates regardless of the card used, though businesses must also watch for hidden fixed fees per transaction that can significantly impact high-volume sellers.
To truly grasp the cost of processing, one must calculate the effective rate by dividing total processing costs by total card sales, rather than relying solely on headline rates. When evaluating different providers, it is essential to look beyond just the transaction rate and consider the complete deal, including fixed fees, monthly plans, hardware requirements, contract terms, support quality, and any minimums. Special attention should be given to small transactions where a reasonable minimum fee can protect margins without violating card network rules. Additionally, businesses must understand local regulations regarding price adjustments for credit card use before altering their checkout processes to pass costs along to customers.
Operational setup plays a vital role in managing these costs through accurate business details and transaction types within the payment gateway, which helps reduce avoidable risk. For online payments, utilizing tools like address verification can confirm customer information, while implementing appropriate security checks and reviewing suspicious transactions before they become disputes serves as a key form of cost control. While multi-processor setups offer flexibility for businesses with varied payment patterns, they require more operational oversight. Regularly reviewing statements for billing errors, unexpected changes, and fees that no longer match the agreement is also a critical step in maintaining financial health.
Finally, when comparing providers, it is important to ask how their pricing would affect your specific transaction mix rather than accepting generic examples. For in-person businesses, GoDaddy offers simple, transparent flat-rate pricing with competitive rates starting at 2.5% plus no fixed fee for standard processing or 2.3% for the Point of Sale Plus plan. Eligible businesses using the Point of Sale Plus plan can activate a rate saver feature to pay as low as 0% on credit card processing while enjoying a discounted debit rate of 1.9%. To choose the right option, consider your specific transaction mix, customer payment methods, and necessary tools, then start with one statement to calculate your effective rate and find the setup that best fits your business needs.
Read the full video transcript
Credit card [music] fees are part of
doing business, but they do not have to
stay a mystery or [music] quietly take
more from every sale than they should.
Credit card processing fees [music] are
the charges a business pays to accept
card payments.
The first step [music] is understanding
what you are paying for and why.
Interchange [music] is the fee paid to
the bank that issued the card.
Assessment is the fee paid to the card
network that carries the transaction.
>> [music]
>> A processor fee is what your payment
provider charges to facilitate a
transaction.
A chargeback fee [music] can apply when
a disputed payment is reversed. Before
you switch processors, [music]
understand the pricing model.
The two common approaches are flat
[music] rate pricing and interchange
plus pricing. With interchange plus, the
underlying card costs [music] vary by
card type and the processor adds its
markup. That can make the final [music]
charge less predictable.
With flat rate pricing, you know the
published rate before [music] the sale.
GoDaddy uses flat rate pricing, so its
standard rate does not change based on
which card your customer uses. [music]
But a flat rate is not the whole story.
Check whether the provider also adds a
fixed fee to every transaction. For high
transaction volume businesses, a fixed
fee, [music] such as 15 cents per sale,
can add up quickly.
That is why you [music] should calculate
your effective rate. Your effective rate
is your total processing costs divided
by your total card [music] sales. It
shows what you are actually paying, not
just the headline rate.
Then compare [music] providers on the
complete deal. Transaction rates, fixed
fees, monthly plans, hardware,
>> [music]
>> contract terms, support, and any
minimums.
Small transactions [music]
deserve special attention.
A reasonable card minimum can protect
margins as long as it follows card
network requirements.
>> [music]
>> If you adjust prices for credit card use
or pass along a card cost,
>> [music]
>> understand the rules that apply where
you operate before changing your
checkout.
>> [music]
>> Your setup matters, too.
Keep your business details, transaction
types,
>> [music]
>> and merchant category information
accurate in your payment gateway.
Better transaction data [music] can
reduce avoidable risk. For online
payments, tools [music] such as address
verification can help confirm the
customer information provided. Fraud
prevention is cost control.
Use appropriate security checks and
review suspicious transactions [music]
before they become expensive disputes.
Multi-processor setups add flexibility
for businesses with varied payment
patterns, but they require more
operational oversight.
Finally,
>> [music]
>> review statements regularly for billing
errors, unexpected changes, and fees
[music] that no longer match your
agreement.
Ask each provider how its pricing would
affect your [music] real transaction
mix, not a generic example. That is how
you compare the full [music] cost of
switching.
For in-person businesses, GoDaddy offers
simple, [music] transparent flat-rate
pricing and the lowest rates in the
market.
GoDaddy [music] in-person processing
starts at 2.5%
plus $0.00 [music]
per transaction. With point-of-sale
plus, it is 2.3%
plus $0.00 per transaction.
To choose the right option,
>> [music]
>> consider your transaction mix, your
customer's payment methods, and the
tools your business needs.
Eligible businesses [music]
with a point of sale plus plan can also
turn on rate saver and pay as low as 0%
on credit card processing with a
discounted [music] debit rate at 1.9%
plus 0 cents.
Start with [music] one statement,
calculate your effective rate, and find
the payment setup that fits [music] your
business at GoDaddy.