Take The Mystery Out of Payment Processing
Learn to identify payment processing fees and choose the best options for you.
Originally published on chase.com
Fees related to taking card payments may be an unavoidable cost of doing business, but by understanding the costs associated with payment transactions, you can take more control of your business and your finances.
What happens after a swipe, tap, dip?
First let’s start with what happens when your customer pays with a debit or credit card. Whether you’re taking the card payment at a physical location, online or via mobile, every transaction goes through the same steps.
- Authorization: The payment network provides the “rails” that the card payment runs on. It is the brand shown on the card, such as Visa, MasterCard, Discover or American Express that confirms that the customer’s account has sufficient funds and reserves the payment amount so that it’s not available for other transactions.
- Clearing: Payment information is sent through the network to the issuing bank, that is the bank/organization that issued your customer’s credit/debit card.
- Settlement: The issuing bank then sends the payment through the network to the acquiring bank (the seller’s bank) / payment processor.
- Funding: The payment processor sends the funds to your account to complete the payment.
The traditional interchange and transaction flow. For illustrative purposes only. These are not JPMorgan Chase prices.
Learn the language
Payment processing fees can be hard to understand. That’s partly because multiple parties charge fees during the process, but they appear bundled together on the bill from the payment processor. Typical fees fall into three categories:
Processors may charge fees in addition to those already mentioned. The following may also show up on your statement:
- Withdrawal fees: Some processors charge businesses to move funds from the processing account to the business’s bank account the same or next day. Chase does not charge a withdrawal fee for businesses that have a Chase banking account, and provides fast funding, often the same or next day.
- Cancellation fees: Your payment processor may charge a fee if you cancel your payment processing relationship before an agreed-upon, contractual term. These agreements can allow for extra cost savings through temporary commitments. Businesses that enroll under Chase’s standard month-to-month agreement do not face cancellation fees.
- Fixed monthly fees: Some processors charge fixed fees, like PCI compliance (card security) and gateway fees. It’s always important to be aware of these when selecting a processor. Chase does not charge additional PCI-related fees.
- Chargeback or Dispute fees: These fees occur when a customer formally disputes a purchase. There is a chargeback fee by the processor. In addition, the customer’s issuing bank temporarily withdraws funds from the business while the claim is being reviewed and provides a reason code. The business then accepts or challenges the dispute. If they challenge and the dispute is deemed fraudulent, the issuing bank or settlement service returns the funds to the business, less the chargeback fee. If the dispute is deemed legitimate, the customer may keep the funds.
Remove the guesswork
Choose a payment processor that cares about your business. Chase Merchant Services supports business owners with clear and transparent pricing, online reporting and account management, as well as advanced security and fraud safeguards. If you’re ready to work with Chase or would like more information, talk with a Chase Payments advisor.
This material was prepared exclusively for the benefit and internal use of the JPMorgan Chase & Co. (“JPMC”) client(s) in order to assist client(s) in evaluating a possible transaction and does not carry any right of disclosure to any other party, without the prior written consent of JPMC. This material is for discussion purposes only and is incomplete without incorporation of other information provided by JPMC. The statements herein are confidential and proprietary to JPMC and not intended to be legally binding and are subject to applicable laws, regulations and service terms. The material is not intended to be a solicitation by JPMC of any product or service. Investments or strategies discussed herein may not be suitable for all clients. This material is not intended to provide recommendations. Please consult your own advisors concerning accounting, legal, financial, tax or other matters. Not all products and services are available in all geographic areas. Eligibility is subject to final determination by JPMC. J.P. Morgan is the marketing name for the Wholesale Payments business of JPMorgan Chase Bank, N.A. and its affiliates worldwide.
JPMorgan Chase Bank, N.A. Member FDIC. ©2021 JPMorgan Chase & Co.
Businesses are required to complete an application and agree to terms and conditions at the time of enrollment. All businesses are subject to credit approval. Merchant services are provided by Paymentech, LLC (“Chase”), a subsidiary of JPMorgan Chase Bank, N.A.
* Next business day funding is available to eligible Chase merchant services clients who deposit into a single Chase business checking account. Visa®, MasterCard®, and Discover® credit and debit transactions are eligible. All businesses are subject to business credit approval and all funds are subject to fraud monitoring. In addition, funding is subject to the terms and conditions of the merchant processing agreement. Chase must receive settled transactions by 10:00 pm EST (some businesses may qualify for a 11:59 pm ET settlement; talk to a Chase representative for more details). Funds are deposited on the next business day, excluding weekends and bank holidays. Some exclusions may apply. The listed payment brand(s) are not sponsors of this program. All marks are marks of their respective companies. Deposit products provided by JPMorgan Chase Bank, N.A. Member FDIC.