How do basis points affect monthly processing cost?

Basis points play a crucial role in determining your monthly processing costs when accepting credit card payments. Understanding how basis points affect your fees can help you better manage expenses and optimize your merchant account.

What Are Basis Points in Merchant Processing?

A basis point is equal to one one-hundredth of a percent (0.01%). In merchant processing, fees are often expressed in basis points to describe the percentage charged on each transaction amount. For example, 100 basis points equal 1% of the transaction value.

How Basis Points Impact Monthly Processing Costs

Since basis points represent a percentage of each transaction, even small changes can significantly affect your total monthly fees. If your processor charges 150 basis points (1.5%) on all transactions, a higher sales volume will result in proportionally higher fees. Conversely, negotiating lower basis points can reduce your overall costs.

• Calculate your average transaction volume to estimate monthly fees based on basis points.
• Compare different pricing models that use basis points to find the most cost-effective option.
• Review your merchant statements regularly to identify any unexpected fee increases.
• Use tools like Merchant Statement Scanner to analyze your processing fees and spot savings opportunities.
• Consider scanning your PDF statements with Merchant Statement Scanner for a detailed breakdown of basis point charges.

By understanding and monitoring basis points, you can take control of your merchant processing costs and make informed decisions to improve your bottom line.

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