Merchants accounts, gateways and rates. Having your kiosk process credits cards swiped locally (card present) come with regulatory standard considerations such as PCI, to mechanical considerations (dual heads). Another consideration is how exactly do you set up a merchant account. What is a gateway?
Merchant accounts are generally your bank account and they have their rates they charge you for credit card transactions, depending on the card between 1.5 and 7 percent. Card present gets a better rate than card not present. Reward cards get charged more. There are batch fees for processing. There are per transaction fees. Couple those with the merchant account (Authorize.net or Verisign for example) and they have their set of fees. They all add up pretty quickly.
In today's environment and with the prime rate as low as it is, some might argue that the credit card companies having a wider spread than ever is having a negative effect (ie the difference between prime and rate-charged is at it's largest differential). Imagine government telling VISA and MasterCard their business.
But we digress... underlying all of this is just understanding how credit card transaction fee's work. One of the best explanations we have found is from
Hospitality Upgrade. They recently ran an article entitled "Understanding e-Transactions Fees". It is recommended reading. Here is
the link.
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