Frequently Asked Questions

How Do I Know Which Payment Processor To Select?

Selecting the right payment processor for your business doesn’t have to be difficult. In reality, deciding which payment processor to use depends primarily on two things. What payment processing services are best suited for your business and which payment processing tools will provide the best experience for your customers.

The first thing you should consider when looking for a payment processor is the platform’s ability to integrate with other necessary business tools. An integrated payment platform should not only help you accept payments faster and more efficiently, but it should also give you access to key features that can help you view and manage the health of your business. The second consideration is the cost. All payment processors charge different fees for credit card processing. Find a payment processing services provider that offers a simplified and transparent pricing structure for their payment processing platform. This will help you avoid getting caught off guard with unexpected processing fees or extreme shifts in expenses each month.

How Much Will Payment Processing Cost?

Regardless of the provider you choose, when you accept debit and credit cards as payment, you are always charged a fee for processing. The amount you’re charged for payment processing will vary depending on the payment company you choose to use. To date, the average cost of processing payments in the U.S. for businesses that do between $100,000 and $250,000 annually is between 2.87 percent and 4.35 percent per transaction. Bank-owned payment processors tend to be on the higher end while most third-party payment processors offer lower rates per transaction.

However, while these payment processing fees may vary from provider to provider, they are all based on existing fees, called interchange fees, charged directly by associated card companies like Visa and Mastercard for businesses to accept their cards.

Understanding how interchange fees work can be complicated, which is why RAZO simplifies pricing for businesses wanting to accept a variety of payments through a flat subscription model. This allows businesses to access the lowest cost of interchange without complicated markups and helps businesses avoid paying more than they have to in payment processing costs.

Will My Business Qualify For a Merchant Account?

In order for it’s important to check the requirements for your specific payment processing account application. Generally, your business will be expected to provide a business bank account, financial statements, business license, physical address, employer identification number (EIN), or sole proprietorship, and a completed application.

What Are The Payment Types I am Able to Accept?

Reports have shown that offering multiple payment channels to your customers equates to an increase in revenue generation. Offering customers the right easy-to-use payment tools at checkout allows your business to go beyond cash transactions expanding opportunities.

Mobile Payments: A mobile payment is a money payment made for a product or service through a portable electronic device such as a tablet or cell phone.

Contactless Payments: Touch-free payments made with credit cards and debit cards, key fobs, smart cards, or other devices, such as smartphones and other mobile devices, that use radio-frequency identification (RFID) or near field communication (Samsung Pay, Apple Pay, Google Pay, or bank application) for making secure payments.

Virtual Terminal: A virtual terminal is a software application for businesses that allows them to accept payment with a payment card, specifically a credit card, without requiring the physical presence of the card.

ACH Payments: ACH stands for Automated Clearing House. This network coordinates electronic payments and automated money transfers between banks without using paper checks, wire transfers, credit card networks, or cash.

How Long Will it Take to Begin Accepting Card Payments?

Depending on the size and complexity of your business, it can take anywhere from merely moments to set up a pay-as-you-go account to 48 hours for an authorized merchant account. For more established companies taking the time (24-48 hours) to properly set up an actual merchant services account is necessary. Add 2-day shipping to that if the account requires a physical device.

Is Credit Card Processing Secure?

Businesses who want to accept credit card payments must implement safety measures, regardless of whether payments are being taken in person or via the web. When the proper safeguards are in place, credit card processing can be done safely and securely. In 2013 alone, businesses lost more than $700 billion due to credit card fraud. Using the right tools and systems can also help reduce the risks that automatically come with accepting a credit card.

Business owners can protect themselves against credit card fraud in many ways:

EMV Compliance: In late 2015, EMV, also known as a chip card or a smart card, became the standard for credit and debit cards across the country. The microchip technology contains better security features than those available for the long-used magnetic stripe credit and debit cards.

PCI Standards: PCI standards came in response to numerous data breaches among large and small businesses. In order to help companies detect, react, and prevent future data breaches these standards were developed.

Tokenization: Tokenization takes sensitive data and replaces it with a randomly generated string of characters that can then be linked back to the original data only by an authorized party.

What is PCI Compliance?

PCI Compliance or the Payment Card Industry Data Security Standard is an information security standard for organizations that handle branded credit cards. The PCI Standard is mandated by the card brands but administered by the Payment Card Industry Security Standards Council.

No matter the size of your business, you must comply with PCI standards. They are put in place to ensure all companies maintain a secure environment to take credit card transactions reducing the risk of fraud. Here at RAZO, we ensure that you are PCI compliant within 30 days of signing up with us (at no cost to you). We believe that it is our job to ensure your business is as secure as possible.

How Much Customer Support Will I Be Able to Access?

Customer support and service vary from business to business. Some businesses are only available via phone or email only. This is a common issue for business owners trying to obtain quick customer support for a payment processing issue. Not being able to collect payments for a few hours or a day could be crippling to a business that is counting on that revenue generation.

At Razo, we put businesses first and focus on delivering the best possible customer experience to every business. When you reach out to us by phone or email for all inquiries and technical support, we have a real, in-house team of experts ready to work with you to find the right solution. We also provide additional resources and tools that help businesses to address any unique challenges and questions they may come across.

When Will I Receive Funds in My Bank Account From the Credit Card Transactions?

The time it takes for a business that accepts a credit card payment until the funds are deposited into the businesses’ bank account can vary depending on the type of merchant account the business owner uses. Payment can take anywhere from 24 hours, three days and 7 days to process and reflect in a business’s bank account. The reason for this time is that the transaction process goes through a number of steps to get from one bank account to another.

What is MDR?

Processing card transactions involves a complex network of financial institutions, which means that payment data often needs to pass between several parties to ensure that transactions can be performed. MDR (otherwise known as Transaction Discount Rate or TDR for short) is a fee charged to merchants by acquirers for maintaining their merchant account and using payment processing services for credit or debit card transactions. Generally, merchants sign up for the service and then agree with their acquirer on the MDR before beginning to accept card payments.

The MDR is calculated and expressed as a percentage of the transaction amount. MDR rates can vary depending on the size of the business, the types of cards used by the consumer, the value of the transaction (more of this below) among other factors.

How does MDR work?

Although MDR is presented as a single-digit percentage paid to the acquirer, it includes a range of different fees, such as:

Interchange fees that are charged by the card issuer. Typically, interchange fees take up the biggest proportion out of the overall MDR.

Card scheme fees that credit card schemes (such as Visa and Mastercard) set for using their payment services. Such fees are mainly defined based on a merchant’s monthly sales volume being processed and the industry they operate in.

Acquirer markup is paid to the payment service provider that provides acquiring services, either for card present or card not present payments to merchants. Unlike interchange and card scheme fees, the acquirer markup is often fine-tuned between the merchant and their acquirer or payment service provider.

What are interchange fees?

Interchange fees are set by and paid to the card issuer by the acquirer whenever a card transaction is completed via a card scheme. The fees paid to the issuer are used to cover the issuer’s cost associated with customer support, system maintenance, fraud mitigation and much more. Interchange fees are determined and reviewed periodically by card schemes.

The difference between Interchange ++ and blended rate?

Now that we’ve analysed what interchange fees are, let’s look at how they fit into the pricing structure. The pricing structure is up to the merchant to choose depending on what their payment service provider can support, with business size playing an integral role in the final decision.

If you want to have a clear and transparent overview your processing costs (i.e., interchange fees, card scheme fees, and acquirer markup), then Interchange ++ would be ideal for you. Alternatively, a blended rate may be a better option if you’re after simplicity.

How does Interchange ++ work?

Interchange ++ is a transparent pricing model that shows a detailed breakdown of the card processing costs into interchange fee, card scheme fee and acquirer markup. This provides businesses with a clear overview of the nature of their card processing costs, which can help them inform their business strategies for maximised revenue.

What is a Payment Service Provider (PSP)?

Payment service providers (PSPs) are regulated digital financial transaction facilitators. They act as intermediaries between merchants or other companies collecting payments and their consumers. PSPs provide various services, such as payment processing, currency conversion, and fraud prevention. They help companies accept online payments from their consumers.

PSPs can integrate with various payment methods and enable companies to accept payments through multiple channels, such as debit or credit cards, e-wallets, direct bank transfers, etc. Payment service providers also take care of technical and regulatory compliance related to payment processing, such as data security, anti-money laundering regulations, and more.

PSPs are an integral part of the entire digital payment ecosystem, enabling merchants and other businesses to accept payments from consumers all over the world.

How Razo can help?

It’s important for merchants to understand how MDR and its corresponding fees are set, the best fee structure for their business, and why these fees are indispensable to card payment processing.

As an expert payment consultant, our team at Razo will offer you strategic 1:1 support and dedicate time to educate you on critical aspects of the payment industry, such as the fees we examined in this article. In this way, we help ensure you have all the information you need to make informed decisions and ultimately make your business thrive.

Why Choose Razo?

Why choose us? We're payments experts here to help improve customer experience, revenue growth, and operational efficiencies. By choosing us as your payments partner, you'll have a dedicated account manager behind you at every step.