Credit Card Companies make money in a variety of ways. Here are the four most common:

 

One: The most common way credit card companies make money is through fees, such as the annual fee, overlimit fee and past due fees.

 

Two: Another way credit card companies make money is through interest on revolving loans if the card balance is not paid in full each month.

 

Three: As explained above, the card issuer (the bank that issued the card and/or the issuer network, be it Visa, MasterCard, Discover) makes a percentage of each item you purchase from a merchant who accepts your credit card. The rates range from 1% to 6% for each purchase.

 

Four: The card issuer can also make money through ancillary avenues, such as selling your name to a mailing list or selling advertisements along with your monthly billing statement.

 

 

 

 

Small businesses have to make a decision about to whom they are going to extend credit. Are they going to extend credit only to those who pay in cash and checks? This may make their payment processing easy, but it will severely limit their customer base. If they choose to extend credit to their customers, it is a little more complicated, but it will expand their reach into the marketplace and the customer base. Most small businesses eventually make the transition to offering credit card (and debit card) processing services.
What is required?

 

 

 


Internet merchant accounts and brick-and-mortar merchant accounts are two different animals. If you are going to operate an e-commerce business (online), then you need at least one Internet merchant account. An Internet merchant account is simply designed to process online credit or debit card payments, which usually involves higher fees to you, the merchant. There are online payment processing services that can handle setting up Internet merchant accounts for you. Alternatively, you can get your Internet merchant accounts through your bank or independent sales organization where you got your brick-and-mortar merchant account.