The Treacherous World of Payment Processing Fees

Ahoy there, mateys! What strikes fear into the hearts of hard-working repair shop owners like yerselves? Is it the sound of changing diesel regulations? Or the quiet moan of dismay when you realize you’re out of the good coffee? 

Those things likely put many a shiver down your spine. But we’re not here to talk about regs or caffeine. No, me hearties, today we’re talking about something even scarier: payment processing fees.

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Lo! Do not flee into the dark night! For these are things any business owner must deal with, and you, friend, are a business owner. So come. Grab some coffee and sit, and together we shall learn about these little charges, how they can add up, and what you can do to make them easier to deal with.

WHAT ARE PAYMENT PROCESSING FEES?

Payment processing fees are the (usually) small charges that come with processing a customer’s payment. What, you thought that was free? Heh. Nope. It takes money to make money, as they say, and every time you accept a customer’s payment, you have to…well…pay for it in the form of fees. 

These fees tend to turn up when you select payment processors that boast about a low baseline cost that isn’t a flat rate. They may mention additional fees, but only in the finest of fine print; generally, these fees are minimal on their own, but there can be a lot of them, and they can add up over time. Because some of them are tied to the amount you’re being paid, there’s a level of variability in how much they can cost, too, which can make it difficult to plan ahead. 

Most repair shops — heck, most small businesses — don’t start out with a firm grasp on just what these fees look like. We’ve heard it ends up playing out like this: They notice their numbers look a little different from what they had forecasted, so they start digging through their statements, and then…suddenly…there they are. Rows upon rows of teeny-tiny fees that just…keep…going…and going…and going…

Huh. So that’s where the money ended up.

(And believe us, there are some shops who don’t even think about the tiny additional costs, assuming they’re baked into the baseline rate. Seriously. We’ve talked to a lot of ‘em. The conversation usually starts with, “They told me I only pay 2%” and then we show them the additional numbers and they realize they’re paying 3.5% once they add up everything in the statement.) 

We believe forewarned is forearmed, so we’ve put together a list of those fees. Now, not all of these fees may end up applying to your shop’s situation, but you should still know what they are so you can identify them if they pop up. Keep on scrollin’. 

TRANSACTION-LEVEL FEES

Transaction-level fees, not surprisingly, are the fees your shop pays when processing a payment. If you’re using your bank or local credit union as a payment processor, you’ll find pages and pages of these fees. 

• Interchange pass through: This is the base cost set by Visa/Mastercard/American Express/Discover that your provider passes along to you. The typical range is between 1.5%-3.5% plus $.10-$.20 per transaction. 
• Card-brand/network assessments: These are extra network fees added on top of the interchange. The typical average fee is between 0.13%-0.15% of the transaction amount. There may also be small fixed fees. 
• AVS/CVV check fee: This fee is for fraud prevention; it requires a few cents to verify the billing address and security code. These typically run between $.01 to $.10 per lookup. 
• Batch/settlement fee: This fee is charged each time you close out your day and send transactions for deposit. These fees average between $.01-$.30; if you batch once per day, that’s 30 of these per month. 
• Refund fee: Some — not all — processors charge a fee each time you need to issue a refund. Some providers also keep the original processing fee on top of that. 

By themselves, these are all pretty small. But let’s say they add up to 3% of your daily revenue. Let’s say your shop brought in $5,000 in revenue today; 3% of that is $150. Maybe it’s a $10,000 day — now you are forking over $300. 

If you’re processing $100,000+ in a month, man, those fees add up. 

But those aren’t the only fees you need to deal with. Oh no. There’s also…

MONTHLY/RECURRING PROGRAM FEES

Shops using more traditional methods like local credit unions aren’t going to escape fees, unfortunately. Think of it this way: your payment partner is providing the means for you to get paid, whether that’s a pay-by-link or a customer portal. If they’ve paved the way for you to accept a payment, then yeah, you have to pay the toll. 

• Monthly account/statement fee: This is usually a flat charge to maintain the account and get regular statements. Some banks don’t charge for this, but some do. 
• Gateway monthly fee: A subscription fee for using an online payment gateway.
• PCI compliance program fee: This fee is for the tools and support necessary to complete required security questionnaires and scans. Some providers charge this on a yearly basis. 
• Monthly minimum processing fee: If your normal payment processing fees don’t reach an amount set by your processing partner, you get to pay the difference.
• Chargeback monitoring/program fees: Enrolling in a dispute-monitoring program can be a good safety precaution, but it’ll cost ya.
• Customer vault/tokenization/storage fee: You pay this fee to securely store cards kept on file for future payments. This will vary by processor.
• Next-day/instant funding premium: This added cost allows you to receive deposits faster than the standard timeline.
• Paper statement fee: This charge is so you can receive printed payments instead of electronic ones. OK, this one, at least, makes some sense. Think of it as paying for the paper.

In the words of Stu from Scream, “But wait! There’s more!”

DISPUTE/CHARGEBACK-RELATED FEES

Oh no. Oh no. It’s happened. A customer has initiated a dispute or chargeback. Not only are you at risk of losing the money that’s due, you may also end up paying for the privilege. More fees can rack up as a situation escalates. Observe:

• The chargeback fee: This is a flat cost assigned each time a customer dispute is opened. It is usually not refunded (even if you win). 
• Rebuttal fee: Want to submit evidence to fight a chargeback? There’s a fee for that. It’s also referred to as a representment fee, which is an awkward word.
• Arbitration fee: If a dispute is escalated to the card network’s final review stage, you get to pay for that.

And we are very sorry, but the fees don’t stop there.

HARDWARE, BANKING, AND CONTRACT ODDS AND ENDS

If you’re accepting credit cards and the like, odds are you’re using a terminal and/or web portal of some sort to take payment. You pay for these, too. 

• Terminal/rental lease fee: If you use countertop or handheld card readers, you are probably paying a fee for them.
• Gateway/terminal support fee: This recurring fee is to cover software updates and maintenance, if you need it.
• Equipment activation/reprogramming fee: This is usually a one-time fee required to set up your terminals and devices.
• Funding/transfer fee: This fee is taken out of every deposit sent to your bank account.
• ACH return/NSF fee: This is charged if a payout or ACH debit fails due to bank issues or insufficient funds. 

WOW, THAT’S A LOT OF FEES

Yeah. Yeah, it is.

A lot of fees.

And look, a good portion of them are pretty necessary: they’re paying for the scaffolding that holds up your entire payment process. Digital infrastructure needs regular maintenance and upgrades just like physical roads and buildings. But there’s still a lot of them. And some of them are variable. But truckloads of fees can still hit your bottom line pretty hard:

• Your margins get thinner. Parts and labor are already expensive, and processing fees skim a little bit off every ticket.
• Big jobs can mean big fees. A $15k repair is gonna turn small percentage fees into a more painful chunk of cash.
• It can get harder to predict revenue. Blended rates and varying card types can make it difficult to know exactly what kind of profit you’ll get from each invoice.
• Fees complicate pricing. Yeah, you might be able to add a surcharge, but that brings other potential issues (including legal ones). 

Geez, Fullbay, you might be saying, what’s a repair shop to do?

We’re so glad you asked!

AND NOW, A SHAMELESS FULLBAY PLUG

If gazing upon an endless list of payment processing fees makes you feel light-headed and queasy, we have a fix for you: STF, or Switch to Fullbay. 

Fullbay provides flat-rate pricing per transaction that covers the bulk of the charges described. You will only have to deal with:

• The fee attached to card-present transactions that utilize the terminal or the card-not-present transactions that require typing cardholder info into Fullbay.
• The ACH fee (if applicable), which is a percentage of the transaction.

In business vernacular, this means: You pay Fullbay a small fee, and we take care of all your other fees besides the ACH.

That’s a lot fewer fees, and:

• No more mystery math. You don’t have to guess what each card or transaction will cost you. You get a more predictable rate and no freaky surprises. 
• Shops keep more of what they earn. You only pay the flat fee (and possibly ACH fee) to Fullbay during the transaction. That’s less money off the top of every card swipe. 
• Easier budgeting. When you know what you’re going to be bringing in, your budgeting and forecasting gets way simpler.
• Faster payments without a penalty. No need to encourage cash or traditional checks anymore — you can encourage credit card payments without worrying that big tickets will rack up some crazy fees.

All good things, right? 

The processors are going to get their cut. You might as well let us handle it and save yourself the death of a thousand cuts (and the accompanying brain implosion when you see the pages upon pages of fees). 

Seriously. 

Want to know more about Fullbay’s integrated payment system? Head right on over here. Want to know what else Fullbay can do, besides banishing fees from your statements? Why, we’ve got a demo for you to try out.