In the modern business landscape, credit cards have become an indispensable part of consumer spending. As a business owner, adapting to this trend is not just an option, but a necessity. However, as with most conveniences, there is a cost attached. Sometimes, these costs can be hidden or difficult to understand, and are often overlooked by many businesses. The following information will answer what is credit card processing, and help you understand how it works.
Introduction to Credit Card Processing
Credit card processing is the method by which businesses can accept customer payments through credit cards. When a customer swipes or inserts their card for a transaction, the merchant’s processing company ensures that the customer’s account is debited and the merchant’s account is credited.
The Mechanics of Credit Card Processing
When a credit card transaction is made, the information is sent to the merchant’s credit card processor. The processor then communicates with the customer’s credit card company to check if the customer has sufficient credit. If approved, the funds are held and deducted from the customer’s credit limit. The processor then deposits the funds into the merchant’s account.
The Hidden Costs: Interchange Fees
One of the primary costs associated with credit card processing is interchange fees. These fees are set by credit card companies and are paid to the customer’s credit card bank by the business accepting the transaction. For every credit card sale, there is an interchange fee that varies depending on various factors such as the type of card used (debit, credit, business, rewards), the transaction size, and the method of transaction (online, in-person).
How Interchange Fees Affect Your Business
Interchange fees might seem small on a per-transaction basis, but they can accumulate to substantial amounts. Especially for small businesses, these fees can take a significant bite out of profit margins. It is crucial for business owners to understand how these fees work and how they affect the bottom line.

Additional Fees and Charges
In addition to interchange fees, there are other fees associated with credit card processing:
Transaction Fees: These are fees charged for each transaction processed.
Monthly Fees: Some processors charge a flat monthly fee for their services.
Setup Fees: There may be a one-time setup fee when you first establish your merchant account.
Compliance Fees: These are fees associated with maintaining compliance with industry standards.
Navigating the Complex World of Credit Card Processing
With the myriad of fees and charges, understanding and managing costs can be a daunting task. The interchange fees are subject to change, and credit card companies like Visa and Mastercard adjust their rates twice a year. Moreover, different cards have different fee structures, adding to the complexity.
Expert Assistance: A Wise Investment
Given the intricacies of credit card processing fees, it is wise to seek expert assistance. RAC Consulting specializes in helping businesses navigate through the sea of merchant processing providers and the accompanying fees. Their goal is to help businesses minimize these fees and their impact on profit margins.
Negotiating with Credit Card Processing Companies
What many business owners do not realize is that in some cases, processing companies can be negotiated with to lower interchange fees. However, this requires industry knowledge and experience. RAC Consulting possesses the expertise to negotiate with processing companies on behalf of businesses.

Balancing Convenience and Cost
Credit card processing is an essential component of modern business operations. It offers the convenience that customers have come to expect. RAC Consulting offers expert assistance in navigating the complex world of credit card processing. By helping businesses understand and manage the costs associated with credit card transactions, RAC Consulting enables businesses to offer the convenience of credit card payments while minimizing the impact on profit margins.
Don’t let hidden costs undermine your business’s profitability. Take control, stay informed, and make decisions that support the growth and success of your business. Contact RAC Consulting and see how they can assist your business with credit card processing, and a number of other services including business consulting, Quickbooks training, and virtual receptionist services. Remember, in business, knowledge is power, and making informed decisions is the key to success.