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Making sense of payment processing

Your guide to merchant services.

What actually is a merchant services provider?
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Also known as a credit card processing company, merchant service providers handle the debit and credit card payments process for businesses. They’re basically the middleman between your bank, your business, and your customers.

This is how it typically works…

  • Your customers pay for their goods or service with their debit, credit or eWallet using a card terminal.

  • The merchant services provider transmits this data and checks with the customer’s bank before accepting or denying the payment.

  • If the customer’s bank approves the transaction, you can then accept the payment through your card terminal and the purchase will be complete.

  • Once the purchase is approved, the payment processor takes their fees (we’ll discuss fees later) and deposits the remaining funds into your merchant account (not to be confused with the business bank account). This is where funds from processed transactions are deposited.

You’ll have also probably guessed by now that your merchant services provider doesn’t have anything to do with cash payments, just card payments.

You’re not alone if you find the world of merchant services and the fees that come with it confusing. To help make things a little clearer, we’ve put together this short guide answering some of your common questions about card payment processing and what you should be looking out for when it comes to changing providers.

So, lets start at the beginning...

How much does it cost to take card payments?

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Unfortunately, there’s no simple answer.

It may feel like you need a finance degree to understand the fees, rates and payment structures of a merchant service agreement. Payment processing fees are as annoying as they are confusing, but it’s important to get to grips with them.

You may have heard of these pricing models before?

  1. Flat-rate
    The most transparent of the three. Flat-rate pricing blends all of the fees into one, easy to predict flat-rate fee. No matter the transaction type (credit card, debit card, reward card), the fees are the same.


  2. Interchange Plus
    Interchange plus pricing is a pricing model that charges based on whatever the interchange rates are at that particular moment, “plus” a markup fee that pays your processors processing costs.


  3. Tiered Pricing
    Tiered pricing is structured into three tiers – qualified, mid-qualified and non-qualified. The tiered model offers the lowest rates for qualified transactions and the highest for non-qualified transactions. Qualified rates typically apply for debit cards and non-reward credit card transactions, while the transactions that attract higher rates are cards, such as business cards and rewards cards. Standard credit cards can fall in the mid-qualified range.


Whether you’re on flat, tiered, or interchange pricing, there are some merchant account fees that will also appear on your statement:

Authorisation fee
The first stage of card processing involves the card issuer authorising the payment. There is a charge for this on every transaction.

Transaction fee
Merchant service providers use transaction fees to describe the per-transaction fee they collect. Depending on your plan, it may also include the percentage applied or the authorisation fee mentioned above.

Assessment fees
Assessment fees are charged by the cardmember associations for various expenses, including fraud prevention and network operations. Merchant service providers sometimes pass them along to their customers.

You may also run into some hidden fees....
Paying with a Credit Card
What should I be looking for in a merchant services provider?

Card Holder Not Present (CNP) Fees
The transaction fee can go up if the cardholder is not present when the transaction takes place. If the customer pays online or by phone, the bank is taking on more risk by authorising the transaction and so will charge a higher transaction fee.

Chargeback Fees
This is when the cardholder raises an issue with their bank, who then contact your bank for the return of the money. This can occur when there’s been fraudulent activity on their card or communication problems between your business and the customer.

Refund Fees
If a customer changes their mind and wants a refund, the bank that issued the card will reverse the payment to the merchant and you’ll be charged with an admin fee.

Minimum Monthly Service Charge
Most credit card processing providers will demand a minimum monthly service charge (MMSC) so they can turn a profit from all their customers. If your monthly transaction fees are higher than the MMSC, your payment processor will not add any additional charge. However, be aware, if your transaction charges fall below the threshold, your supplier will add additional charges to bring your monthly bill up to the MMSC.

PCI Compliance Fees
When handling sensitive data, such as customer credit card details, you’ll need to make sure you’re doing so in compliance with Payment Card Industry Data Security standards. This doesn’t just mean reading up on the latest card fraud protection trends – although you should do that too – there are in fact costs of staying compliant.  Your business will need to undergo a series of checks, to make sure it’s not exposing customers to risk or fraud. What these ‘checks’ look like will depend on the size of your business and how many transactions you process. Many merchant account providers will handle this for you, for a small fee – so make sure you ask!

Set Up Fees

Don’t get caught out, not all payment processing platforms charge an account set up fee. Make sure you shop around, so you don’t end up paying one!


Early Termination Fees

Check your T&Cs, you may need to pay an early termination fee if you want to switch credit card payment processors before your contract ends.  The cost will vary depending on the company you’re dealing with and how early you are in the contract.


Reporting Services Fees

Some providers charge you to access their online portal to see reports.

A very common approach for businesses new to the industry is to choose a provider solely based on price. We’re not suggesting that getting competitive rates is not important, it is! But price is just one of the many factors that you should be considering. We’ve put together a handy checklist with some of the key points to look out for:


Do they offer a ‘pay as you go’ model? This falls into the same bracket as the flat-rate fee model we discussed above. If you don’t transact, you don’t need to pay anything.

If your PED (Chip & PIN device) breaks, will your provider replace it the next day? You don’t want any technical faults to disrupt customer spending!

Can you shop around for consumables (till rolls) or will you be stuck in a subscription service?

Do they provide P2PE compliant, integrated PEDs? Payment security is crucial. Making sure your PEDs are compliant also cuts down on the paperwork and saves you time!

What support are they offering? Things can and will go wrong. You’ll want good customer service and support from your merchant account provider that’s available out of hours.

Introducing Payments by Cunninghams EPOS Group

We know that costs can quickly add up if you’re accepting debit and credit card payments, which is we've launched our own master merchant service, which means we can now help our clients save money by achieving a more competitive rate.

Here are just some of the benefits of switching to Payments by Cunninghams EPOS Group:

  • Better rate
    Our team will work hard to help you reduce costs and secure a better rate


  • Hassle-free switch
    We'll make it easy for you. We might even be able to cover the cost of buying out your contract, so you’re not stuck with the same provider.


  • Fast & easy on-boarding
    We like to keep things simple. We'll make the process as quick and easy as possible, leaving you to focus on running your business.


  • Latest PED technology with 'Pay at Table'
    Get latest touchscreen chip & PIN technology designed with convenience, security (P2PE compliant) and simplicity in mind. We can also supply a 4G SIM (optional) if your internet fails, so you can keep processing payments.


  • Forget about hidden charges
    With us, your payments will always be transparent. We'll make sure you're aware of all the costs involved. You won’t be faced with PCI or hidden transaction fees.


  • Pay as you use
    Only pay when you transact. No minimum fee involved!


  • Support
    Our team will be on hand to provide on-site, online or telephone support.


How much could you save?

To find out how much you could save by switching, click the button below to complete our quick form and our team will be in touch with a quote.

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