What’s the difference between authorization fees and commission fees in a payment gateway?
Payments
Asked by Question Bot10/Jan/20121 answer
1 Answer
F
Faisal Khan
Answered 10/Jan/2012
The commission as you put it - is the equivalent of swipe-fees that merchants have to pay to the bank. This is usually a percentage amount of the total sale value. Depending on how you are structured with the merchant services issuer of the bank you deal with, this can be anywhere from say 1.8% to 5.0% of the amount charged.
This fees usually is collected on your behalf by the bank and is not given to you (assuming you do not have any margin added on this). The fees is split by the Bank and the Card company (i.e. Visa, Mastercard, American Express, Discover, etc.) better known as the Card Association.
The swipe-fees represents the larger component in a credit/debit card transaction.
The other fees, which you have cited as authorization fees is termed in the industry as acquiring fees which represents the authorization, capture and settlement of a transaction. This is usually a fixed amount, for example like: $0.45 per transaction or $0.25 per transaction. Lately, this fees has been under a lot of debate, as the cost for processing each transaction gets lowered every year, banks and card associations continue to keep these prices high.
This fees usually is collected on your behalf by the bank and is not given to you (assuming you do not have any margin added on this). The fees is split by the Bank and the Card company (i.e. Visa, Mastercard, American Express, Discover, etc.) better known as the Card Association.
The swipe-fees represents the larger component in a credit/debit card transaction.
The other fees, which you have cited as authorization fees is termed in the industry as acquiring fees which represents the authorization, capture and settlement of a transaction. This is usually a fixed amount, for example like: $0.45 per transaction or $0.25 per transaction. Lately, this fees has been under a lot of debate, as the cost for processing each transaction gets lowered every year, banks and card associations continue to keep these prices high.