In the world of credit card processing how do the resellers make money? All of the companies that contact me say they can beat everyones prices. How?
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Credit cards are basically trying to incentivise you to spend money, and forget about it just enough that it costs you more than it costs them. A lot of them offer “incentives”, that cost them almost nothing, but give you some level of perceived value. If you take the ones that offer exclusive access to otherwise VIP/Paid areas as an example, it might cost you $100 to get in once, but to the card seller, they can strike a recurring deal that would cost them pennies per client, or they might even be paid to offer the service, as a form of advertising/marketing, in the hopes once you’re in the VIP area, you’ll spend VIP prices on things.
Some of them are also using it to harvest extra data about spending, which they’ll resell through data broking.
The Credit Card processors have a base rate and fee. The resellers sign up businesses at a rate and fee that are higher than the base and receive the difference.
The fee is for the transaction. The rate is a percentage of the transaction amount. If the base fee is $0.25 and the reseller signs them up at $0.35, then the reseller makes $0.10 on every transaction. If the CC places a 0.05% fee and the reseller signs them at 0.07%, then they will receive $0.02 for every dollar spent in the transactions.
There are also other commissions from the processor companies for the card readers and sometimes a one time commission for signing up.
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