Assessment fees affects both merchants and payment processors.
These fees, often overlooked but significant, are charges imposed by card networks like Visa, Mastercard, and Discover for using their payment infrastructure and services.
Assessment fees differ from interchange fees, though both are part of the total cost of processing payments.
While interchange fees go to the card-issuing banks, assessment fees are collected directly by the card networks to cover network operations, fraud prevention, and technological development.
Key Characteristics
Assessment fees typically have several defining characteristics:
Each card network (Visa, Mastercard, Discover, American Express) sets their own assessment fees.
Assessment fees are fixed by the card networks - merchants cannot negotiate or bargain these fees.
Fees vary based on card type (credit vs. debit) and transaction type
They're usually calculated as a percentage of the transaction volume
Fee Structure
Card networks typically charge a fixed amount plus a percentage of total volume per transaction.
For instance, the debit assessment fee for Visa is $0.0155 per transaction + 0.13% of all debit card volume.
Comparatively, its credit assessment fee is slightly higher at $0.0195 per transaction + 0.14% of all credit card volume.
Payment Processing Cost Breakdown
Payment Processing Fees (Example Breakdown)Â =
[Assessment Fees (25%) + Interchange Fees (45%) + Processor Markup (30%)]
Assessment vs. Interchange Fees
Interchange fees are paid to the card-issuing banks to cover their costs and risks of providing card services to consumers.
They typically make up the largest portion of processing costs (about 70-90% of the total fees) and vary widely based on factors like merchant category, transaction type, and card type.
In contrast, assessment fees are smaller (typically 0.11% to 0.15%) and more standardized, going directly to the card networks themselves.
Think of interchange as paying the bank that issued your customer's card, while assessment fees are paying the network (like Visa or Mastercard) that makes the transaction possible.
Assessment vs Processor Markup Fees
While assessment fees and interchange fees are network-mandated costs, processor markup fees represent an entirely different category of charges.
Assessment fees are fixed rates set by card networks, but processor markup fees are the additional charges added by your payment processor to cover their services and generate profit.
Think of processor markup as the "handling fee" – it's negotiable and can vary significantly between providers.
Unlike assessment fees which are standardized and transparent, markup fees might appear in various forms such as monthly fees, statement fees, or percentage markups added to your transactions.
Managing Assessment Fees
While assessment fees cannot be negotiated, merchants can optimize their overall processing costs by:
Understanding the fee structure for different card types and implementing strategies to encourage the use of lower-fee payment methods.
Maintaining proper transaction categorization to ensure accurate fee assessment.
Regularly reviewing processing statements to identify any unusual fee patterns.
Assessment fees represent just one piece of the payment processing puzzle, but understanding them is crucial for businesses to manage their payment processing costs effectively.
By staying informed about these fees and their impact, your business can make better decisions about its payment acceptance strategies and maintain healthy profit margins.
Understanding assessment fees and the overall payment processing landscape can be complex.
Take the first step toward understanding and optimizing your payment processing costs.
Visit jrpayments.com to schedule your free consultation and discover how we can help your business save money on payment processing.
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