Payment processing fees

Payment processing fees
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Christian Jacobsen  April 11th 2024
Table of contents

In order to make local or international transactions, freelancers usually have a very common barrier: commissions. In order to get paid for their work they require bank transfers, or some kind of digital payment, so they usually lose a lot of their money in those payment processors. For example, credit cards, when making international transactions, charge fees. However, so do payment processors. Processors typically charge fees at one of the pricing structures discussed below.

Flat Fee

The processor charges a flat fee, made up of the interchange fee, the card brand fee and its own margin fee. The advantage of this is that it is something you count on every month, can be fairly predictable thus making it easier to estimate your business costs. The downside to this aspect of the flat rate is that you will not benefit from cheaper interchange rates as you are locked into a single rate.

Tiered pricing

Tiered pricing divides the rate structure into tiers: "qualified" which are the lowest rates; and "medium" or "unqualified" which are the highest rate tiers. This structure is one of the most common, however people go in with the idea that they can take the lowest rate, but typically only a few transactions see the low tier; most end up in the "unqualified" tiers. This depends on whether you use cards or transactions that are not covered, because that is where you pay the highest rates. It all depends on the plan you have.

Interchange Plus Pricing

In interchange plus pricing, the processor will use the lowest applicable interchange rate and charge you a flat rate on top of that. The advantage is that you will receive the lowest possible interchange rates, always knowing what the fixed rate will be.

However, the processor's interchange rates may vary depending on multiple factors, such as volume, industry and number of monthly transactions.

Membership or Subscription Pricing

Membership or subscription pricing charges a monthly fee and a flat fee for each transaction. The processor does not add a fixed percentage into this pricing structure, so the total charges may be lower.

However, while the charges may be lower, whether or not they actually end up being lower depends largely on factors such as the number of transactions and the volume of business. Perhaps no fixed markup is paid to the processor, but the membership fee is. It's a matter of looking at the number and seeing what benefits you the most.

Merchant Service Provider (MSP) fees

These fees can vary greatly and really depend on these aspects: industry, transaction volume, processing volume, and the processing fees you pay. Fees also vary by the services you choose. Some may charge per transaction, some may charge monthly fees; it's just a matter of comparing what is best for you and your business.

Now, we can tell you that having talked about all these payment processor fees, Crema is the best. For only 6% commission per transaction, you will be able to pay, or get paid, with any exchange rate you want. From dollars to pesos, from pesos to dollars, from dollars to euros, and even with crypto! That 6% will never change and you won't have to worry about fees; just know that Crema will keep 6% of every transaction you make and with this, you will have access to the best economic organization a freelancer can have.

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