What are “Daily batch fees”

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I see this a lot since I am currently looking for a payment gateway for my website and am looking into merchant accounts and don’t fully understand what it is or how it works.

Something along the lines of :

* Per transaction 10¢, daily batch fee 10¢ 

In: Economics

Credit card processing companies don’t provide their services for free. Every credit transaction comes with a fee, and they are processed in batches which in turn can come with their own fee.

This is why credit companies can afford to provide their credit services for essentially free, not charging a fee for users if they pay off their balance in full every month. The vendors are paying for the service and passing those costs on to the customer.

When you process credit card transactions, usually your processor will wait until the end of the day to submit all of that day’s transactions to the bank at once, known as a batch. There is a fee to submit the batch, called the batch fee.

So, every day you have credit card transactions, you get charged the batch fee. It’s the same fee whether you have 1 transaction or 1M transactions.

This is why some companies don’t take certain credit cards.

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Credit cards are only “free” to the consumer. The merchant actually has to pay a fee, usually around 3% of transactions. You can pay this per transaction, or you can pay by batch. (a list of transactions, all done at once every day.)

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So if you take say $10,000 in sales, the credit card companies are going to charge you roughly ~$300 in fees.