Every retail merchant who accepts credit cards is familiar with gateway fees, the charges associated with credit card gateways that offset the cost of the services they provide. Credit card payments were once processed through devices called credit card terminals, machines with keypads and magnetic strip readers that processed the information encoded on the credit card and sent it through phone lines to an authentication center where that information was verified. These days, merchants are increasingly turning to virtual credit card terminals, web technology that allows credit card information to be entered on a computer screen and transmitted to the authentication center over the Internet.
Before that information can be transmitted to the authentication center, however, it must be processed through a credit card gateway, a type of ecommerce software that guarantees the transaction will be secure and that credit card information will not be intercepted in transit.
Gateway Services
Gateway fees pay for the important services gateways provide.
Gateways protect the security of each individual transaction between a merchant and a customer.
Gateways are essential to negotiating many different types of network protocols. Every major credit card processor has its own processing network, and each of these networks has its own protocol for checking to make sure the credit card in question has not expired or been reported lost or stolen, and that the funds in question are, in fact, available. Implementing these protocols among millions of merchant transactions, aggregating that information, sending it to Visa, MasterCard and the other companies that facilitate electronic fund transfers is difficult, expensive IT work.
Gateways provide a valve in the flow that allows nonpayment-related transactions to be implemented, as is the case when a transaction needs to be reversed.
Gateway Fees
Credit card gateway fees vary from provider to provider. These fees are generally the basis for competition among gateway providers who will often waive the initial set-up fee in order to obtain a higher percentage fee, which, in the long run, will earn them more money.
Initial Set-up Fee: The initial set-up fee can range anywhere from between $200 to $600.
Secure transactions fee: The secure transaction fee ranges from between $15 to $30 per month.
Percentage Fee: A percentage of each sale is taken as commission, and assessed on a monthly basis. Percentage fees range from between 2.5 percent to 3.5 percent.
Transaction Fee: A flat transaction fee of $0.25 is also assessed on each sale.
A monthly minimum must be maintained. If it is not, most gateway providers will impose an additional fee.
Gateways provide the secure technology that allows customers to present their credit cards, and merchants to accept them, with full confidence.