The US rate for credit card (and check card) processing is indeed very high! The upside of this is that it makes a variety of financial firms (banks and credit card companies) quite interested in issuing them. For instance, some banks will offer no-fee bank accounts with direct deposit and a certain minimum number of monthly check-card purchases (in lieu of requiring larger minimum balances). Some providers will also explicitly send a significant fraction of these fees right back to the customer as "cash back", airline-miles, or similar rewards.
(The downside is obvious. The dynamics of the interplay are interesting. I wonder if there are any good studies.)
You actually negotiate the interchange fee somewhere along the process of getting a merchant account. If you're a "Level 1" merchant you pay less and smaller merchants pay more, American Express and Discover charge more, if you're in a dodgy business coughPORNcough you pay quite a bit more. I think that Visa or MasterCard will increase your interchange fee if your customers do too many chargebacks and disputes, too.
I'm out of touch with that any more, but 1.75% used to be a very good interchange rate maybe 10 years ago.
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Doesn't that depends on countries? Last time i heard the US credit card payment system was some ridiculously expensive rate at 2 - 3%.
The US rate for credit card (and check card) processing is indeed very high! The upside of this is that it makes a variety of financial firms (banks and credit card companies) quite interested in issuing them. For instance, some banks will offer no-fee bank accounts with direct deposit and a certain minimum number of monthly check-card purchases (in lieu of requiring larger minimum balances). Some providers will also explicitly send a significant fraction of these fees right back to the customer as "cash back", airline-miles, or similar rewards.
(The downside is obvious. The dynamics of the interplay are interesting. I wonder if there are any good studies.)
You actually negotiate the interchange fee somewhere along the process of getting a merchant account. If you're a "Level 1" merchant you pay less and smaller merchants pay more, American Express and Discover charge more, if you're in a dodgy business coughPORNcough you pay quite a bit more. I think that Visa or MasterCard will increase your interchange fee if your customers do too many chargebacks and disputes, too.
I'm out of touch with that any more, but 1.75% used to be a very good interchange rate maybe 10 years ago.