Pricing
Processing Fee
Definition
Processing Fee a general term for fees charged to process payment transactions. Can refer to the total cost (MDR) or specifically to the acquirer's fees separate from interchange. Processing fees may include per-transaction fees, percentage fees, monthly fees, and various incidental charges. Understanding all components is essential for comparing processor costs accurately.
Related Terms
Merchant Discount Rate
The total percentage fee a merchant pays for accepting card payments, encompassing interchange, scheme fees, and acquirer markup. Often shortened to MDR. In blended pricing models, this is presented as a single rate (e.g., 2.9%). In IC++ pricing, the components are itemized separately. MDR varies significantly by merchant risk profile, volume, and negotiating power.
Transaction Fee
A fixed fee charged per transaction, regardless of transaction amount. Common examples: $0.30 per transaction with Stripe, or $0.10-0.20 per authorization in IC++ pricing. Transaction fees have greater impact on low-value transactions - a $0.30 fee on a $10 transaction adds 3% to cost. Merchants with low average ticket values should negotiate lower per-transaction fees.
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