Five Factors Directly Affecting Credit Card Processing Rates

The world of credit card processing can be a challenging one to navigate for business owners who are unfamiliar with the basic concepts of payment processing rates and services. Most business owners opt for convenient aggregator style services with inflated rate structures and poor customer service as a result of a lack of basic merchant service knowledge.

Ironically the first question merchants typically have in regards to processing is, “what are the rates?” Understanding different rate structures and fees can vary greatly from processor to processor, but there are five basic factors that affect credit card processing rates significantly.

Monthly & Annual Volume

Just like anything else you buy in bulk, the more volume you process, the lower the rates. Large grocery stores, airlines and department stores, for example, receive the best rates as a result of their high monthly sales volumes. Businesses with low monthly and annual volume have higher rates, but once their sales volume increases rates can always be lowered.

Average Ticket Size

Businesses with a low average ticket size like coffee shops or convenience stores are typically paid with a debit card. The purchase amount is debited directly from a bank account, therefore rates are lower. Larger tickets and more expensive purchases are generally made with rewards cards or corporate cards which carry a higher rate.


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Types of Cards Accepted

Each tier has a separate rate, categorized from low to high risk: Debit, Credit, Rewards, Mid-Qualified, Corporate and Non-Qualified. Mid- Qualified is a keyed in card in a retail setting. A Corporate card is a card issued by a company. A non-qualified rate occurs when a transaction doesn’t meet the card association requirements. For businesses that wish to see every card type and associated rate, individual card pricing called “interchange” is another approach to rates.


Those businesses operating on a seasonal basis such as corporate events, carriage rides during the holidays or fireworks in July, can reduce their overall fees by closing their merchant account during the off season. Rates are also typically lower as the average ticket size and annual sales are low making the overall risk minimal.

Level of Risk

Rates are determined by Industry, Processing Methods (Phone, Internet, In-Person, Mail- In), the type of card received and if the transactions are settled daily. For example, the healthcare industry has a relatively low risk as there is a relationship between the doctor and the patient. In this case the payment may be made in person or mailed in. A business selling via the internet has the highest risk due to fraudulent purchases and chargebacks. E-commerce always carries the highest rate regardless if card type.
For a free rate review and consultation, Contact Us at NTC Texas to learn if you are receiving the best rates for your level of risk today!