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How do credit card processing fees work? Many places now have a requirement for the amount that you buy because of the processing fees. These are relatively easy to understand if you know a little about how the credit card system works.

Ultimately, each card or issuing bank sets the fee you pay at the ATM, for example, and then the merchant provider tacks on another cost. That means you could pay up to $3.00 for an ATM between the charges. The credit card companies and banks are responsible for setting their fees, and then the merchant providers take a cut as well.

If you are a store or other vendor then it’s important to know how the merchant provider aspect works; it is smart to ask customers to process debit cards instead as the fees are lower or non-existent whereas it could be $.40 for a transaction. That $.40 can add up, which is why many places have a $5 or $10 minimum purchase requirement to use a credit card or debit card. Some more creative or enlightened places offer to pass the $.40 on to the consumer, allowing them to tack on that extra charge if they wish to make a purchase under their requirement, whatever that number may be.

While it can be confusing, credit card processing is relatively straightforward. It really depends on the issuing bank, credit card company, or merchant provider that you work with; there isn’t a huge middle-man problem as people perceive. It’s a little complicated when fees come from different places, but vendors and merchants can work with their credit card vending service to figure out which merchant providers are available and how to maximize profits in terms of encouraging debits instead of regular credit cards, if that is allowed for their merchant provider.

With a little dedication, attention, and research it’s not too hard to navigate the world of credit card processing if vendors are attentive to detail. They can have control over which banks and merchant providers they choose to work with and can use clear communication to find a way to work well with their customers as well.