Blog Article

What variables affect the cost of processing payments?

Author: Zakry Chami

The cost of processing credit transactions varies depending on a few variables. They do not affect your payment processor's costs of handling payments, but instead, these variables affect the non-negotiable base costs of processing payments.

First off, all credit cards are not created equal. The more benefits or perks a card grants a cardholder, the more expensive the rates are for you, the merchant. Each type of card has its own interchange fee that the card network determines.

Types of Credit Cards:


BASIC (QUALIFIED) - no points, no perks, no benefits



AFFINITY (NON-QUALIFIED) - on behalf of affiliations, partnerships, brand retailers, a small portion goes to the organization



PREMIUM (NON-QUALIFIED) - corporate, business, or cards that offer additional perks, cash, points, insurance, discounts, etc. eg. cashback, airline/frequent flyer

Secondly, the rates are dependent on how the card is accepted. Is the card being tapped at a terminal, entered in over the phone, or on your e-commerce site? In card-not-present scenarios, the rates are usually higher due to increased risk of fraud and chargebacks.

Types of Transactions:


CARD PRESENT - when the card being used is physically present at the time of the transaction: in-store with tap or chip.

notpresentCARD NOT PRESENT - when the card being used is not physically present with the merchant at the time of the transaction: manually entered online on an e-commerce site or over the phone.

And lastly, some industries or some types of businesses are at a higher risk of fraud and therefore may have a harder time getting approved. For example, adult entertainment and electronics stores are at a greater risk of chargebacks and disputes.

Looking to learn more about the costs of processing payments? Get in touch with one of our payment experts about our transparent billing model!

Zakry Chami

Zakry Chami

is the Product Marketer at Paystone. You can find him playing squash at his local fitness club or planning his next backpacking trip.