Real Time authorization processing will approve or decline a credit card transactions immediately. This kind of authorization processing is especially useful if your company deals in a huge volume of online orders. If the numbers are not high, then the added cost and possible fraud risk may be too much for your company.
Which is better?
Which form of authorization processing is better depends a lot on your company’s size and style. The major difference between batch and real time is on the back end. It is a behind the scenes process that, in most cases, the customer will remain in the dark about. As long as the customer is given an order and number, then they will be satisfied that the transaction went through.
Merchant Fees
Running a business is a constant chess game of your bottom line versus your expenses; if you hope to help your bottom line win, you will need to know your opponent well. Merchant account providers have a variety of fees and costs associated with service, and they will vary from provider to provider. Depending on the volume of transactions and the amount of each, merchant fees could render your transactions profitless.
Discount Rates
Discount rates refer to the percentage of each transaction the financial institution will charge merchants for use of their service. The percentage is typically on a sliding scale, dependant on the average order size; larger order sizes means smaller discount rates, which average around two to three percent.
Intercharge Fee
The Intercharge fee is the amount per transaction that is charged to the merchant as a flat fee, and can range anywhere from a quarter to 70 cents and up per charge. If your business sells widgets at less than a buck, and your intercharge fee is 50 cents, half your potential profit is gone. Note that is before figuring in Discount rates and your own operational expenses.
Monthly Fees
The merchant account provider may charge a monthly fee to cover statements and the like.