A payment gateway allows merchants and businesses to accept online digital payment across many payment modes. Payment gateways play a crucial role in eCommerce and are in part responsible for its massive boom over the years.
Although having a partnership with a great service provider is crucial, there are charges that a business has to incur as payment gateway charges in terms of setup fees, annual maintenance charges, transaction fees, etc.
In this article, we will look at what these charges mean and what factors affect these charges.
What are Payment Gateway Charges?
These are fees that a service provider charges to businesses for providing their services to them. The charges are usually a percentage of the transaction amount and could vary across payment methods.
Moreover, sometimes the level of risk involved in the transaction is also factored in the charge that the business would need to pay the service provider. Everything from setting up the payment gateway, to maintaining it for error-free transactions is chargeable to ensure a smooth and satisfying experience for both the business and the customer.
Types of Payment Gateway Charges
Listed below are a few of the most common charges applicable across different payment gateway service providers!
- Payment Gateway Setup Charge: It is a one-time fee charged by the service provider for setting up the payment gateway service with the merchant’s online store or website.
- Annual Maintenance Charges: It is a yearly charge by the service provider borne by the merchants to ensure proper maintenance of technology, upgradation of security, and operations.
- Integration Charges: As the name suggests, it is a fee for integrating the app or website with the payment gateway.
- Merchant Discount Rate: It is a fee charged on the total value of the sale before transferring money to the merchant’s account. It is generally a small percentage of the total value of the goods or services that have been sold.
What are the Factors that Affect Payment Gateway Charges?
Several factors affect the charges a business would have to incur on partnering with a payment gateway service provider. Let’s look at a few of the factors below.
Interchange Rate
It applies to all credit card transactions. It is levied by the card-issuing network such as VISA, MasterCard, Amex, etc. to the receiving bank on every payment charged to the credit card. Three factors affect this: the type of card used, nature of business, and mode of payment. It is to be noted, that the riskier a business model, the higher would be the interchange charge.
Merchant Account Fee
Accepting credit card payments from customers requires the merchant to link their merchant account with the credit card network. As you may be aware, a merchant account is critical for accepting credit card payments. The merchant account service provider will charge you a fee for depositing the money received into the business account. This charge varies as per the type of business and the number of transactions.
Payment Security
Since a payment gateway is responsible for ensuring the safety of the customer’s financial information, they levy a security charge as per the degree of risk involved. This risk is determined by how a customer chooses to make a payment using their card, i.e., whether the payment is taking place at a physical store using a swipe machine, billing over the phone, or online. The riskier the method, the higher the payment security charges would be.
As mentioned, these fees are crucial for the proper functioning and maintenance of the payment gateway. Some charges are fixed while others vary.
As a business owner, you should always choose a payment service provider that offers you the most cost-effective yet most secure like Buy now pay later experience to ensure that your business can service customers in a way that results in repeat visits and an overall satisfying experience!
See Also: How to Set Up a Shopping Cart Website