Demystifying Payment Fees:
Your Guide to Smarter Transactions
Knowledge is power when it comes to accepting payments. If credit card processing has ever felt like a maze of payment fees and surprises, you’re not alone. Understanding how it all works can help you make smarter business decisions, especially in self-service and unattended environments. Read on to learn our top tips and tricks for not over-paying for payment processing!
Need a refresher on who’s who, the difference between a card network and an in issuing bank, or which fees you can and can’t negotiate? Check out this blog post.
1) Don't Be Tricked by Low Processing Rates + Hidden Fees
If you plan to accept non-cash payments (credit cards, debit cards, etc…) on your vending machines, micro markets, or kiosks, then you’ll need a payment processor. It’s what makes those transactions happen behind the scenes, and ensures you actually get paid.
But here’s the catch: payment processing fees can be confusing, and sometimes even misleading. You might see an offer that looks great – like 2.99% – but that’s often just the tip of the iceberg. Literally! See that thing above? Often costs are hidden below the surface.
TIP: If an offer looks too good to be true, it probably is! Seeing a processing rate much lower than others? Dig deeper and ask about per transaction fees and monthly fees.
These fees are a normal part of accepting credit cards. But, how much you pay – and what you’re really paying for – can vary a lot depending on your setup and your provider. Some fees (like those charged by banks and card networks) are non-negotiable. But others – like the payment fees – are able to be negotiated.
Let’s break it down with a real example:
Say you bring in about $250 a month from 125 card transactions, with an average sale of $2.00. You get three payment processing offers:
- Provider A: 2.00% + $14.75 monthly fee
- Provider B: 5.70% + $5.50 monthly fee
- Provider C: 7.90% + $0 monthly fee
At first glance, Provider A looks best, right? Low rate. But, once you factor in the monthly fee, all three options end up costing you the same: $19.75 a month!
So, which is the better deal?
That depends on your average ticket size, number of transactions, and business goals. The point is – don’t fall for “teaser rates” without doing the math. The real cost of payment processing is about the full picture, not just what’s on the surface.
2) Check your Statements and Card Data
Those flashy rewards cards—like travel, airline, or premium cashback cards—might feel like a win for customers, but someone’s paying for those perks. And that someone is you, the merchant.
High-reward cards come with higher interchange fees, which means it costs more for you to accept them. This is known as the “high roller effect.” If one of your machines is in a location like an airport, hotel, or stadium—where premium cards are common—your processing rates at that location may be higher than average.
But it’s not just about where your machines are. It’s also about what they’re selling.
Let’s say one machine sells $15 lunch combos, and another sells $1.50 snacks. Even though they’re both part of your business, those two machines should not be on the same processing rate plan. Why? Because they qualify for different pricing based on the average ticket size—and lumping them together could raise costs across the board.
TIP: Different machines need different rate plans. Review your card data and average ticket size by machine – you might be overpaying without realizing it.
What you can do:
- Review your card data by location. Look at the mix of cards used and the average transaction amount.
- Separate machines with different ticket sizes or card mix into different pricing plans or merchant accounts.
- Avoid combining low-cost and high-cost locations or machines under one rate plan – that can cancel out your savings.
- Adjust your prices if needed at higher-cost locations to keep your margins healthy.
By taking the time to separate your machines by ticket size and location, you can avoid unnecessary fees, qualify for the best possible rates at each location, and make sure you’re not overpaying just because one machine is serving “high rollers.”
3) Best For Last? Your Average Ticket Size REALLY Matters!
Let’s keep it simple: The size of your average sale has a big impact on how much you pay in processing fees. Not your average product price, but your average per-sale price.
If most of your sales are for small amounts, maybe under $5.00, you might qualify for small-ticket interchange rates, which can save you a lot of money. But only if your processor sets you up to get them. Small-ticket interchange rates are special discounted processing fees for low cost purchases, usually $5.00 or less. They’re designed to make it more affordable to accept card payments on small items, like those found in a typical vending machine.
TIP: When your average ticket size is low, your processing rate goes up – make sure you’re getting the best deal possible with small ticket interchange rates!
As your average ticket size goes up, your processing rates usually go down. And when your ticket size goes down, those fees go up. For example, a vending machine with a $2.00 average sale might pay around 4.5% in processing fees. But a micro market with a $15 average ticket could drop that rate to as low as 2.5%!
Having a small average ticket size isn’t a bag thing, but it is important to make sure you’re getting the best deal possible. It also makes sense now why you might see low processing rates to make the pricing look more attractive, without taking a closer look at other fees like per-transaction fees or monthly fees to allow the payment provider to give you that “low” processing rate.
Work Directly with Apriva for the Best Service + Rates!
- Your business is the stated merchant on record with the banks and card brands, so Apriva never touches your money, it’s always yours, and it’s paid out by a Federally regulated, reliable, and trustworthy Acquiring Bank like J.P. Morgan Chase.
- No hidden markups or extra processing fees – what you see is what you pay.
- One single point of contact to navigate the complex world of bank and card networks.
- Simplified and streamlined fee structures to make managing your costs easier than ever before.
Understanding how processing fees work doesn’t just save you money—it gives you control. Whether you operate a single vending machine or manage a nationwide network of micro markets, knowing how fees are structured lets you make smarter decisions about pricing, placement, and providers. At Apriva, we believe transparency leads to better outcomes. We’re here to simplify the process, help you find hidden savings, and support you every step of the way.
Visit our processing page to learn more about how we support payments, and contact us today to get started.
