Non Bank Card Fee

Non-Bank Card Fee

A non-bank card fee is a cost associated with transactions that involve credit cards that are not issued by a bank. 

Some credit card networks like Visa and Mastercard do not issue cards. They rely on third-party banks like Wells Fargo, Chase, or Citi to issue their cards to the public. 

On the other hand, American Express and Discover act as both the card-issuing bank and the payment network. 

These companies have a dual source of revenue on interest-earning products as well as fees collected during payment processing. 

Fees Explained

In payment processing, there are a few key fees involved: 

• Interchange fee - This is usually a percentage plus a flat rate. The costs vary by card network, with American Express usually being the most expensive. Issuing banks receive the interchange fees. 
• Assessment fee - This is the amount the payment network receives and is usually a small percentage ranging from .13 - .15% 
• Processing fees - These are costs charged by payment processors providing businesses access to credit card processing and vary widely by the processor.

With non-bank cards, the interchange and assessment fees are collected by the card network. 

Compared to the other card types, their interchange and assessment fees tend to be higher.

As a result, fewer businesses may decide to offer these as payment types. 

These fees can change though. Several years ago, American Express reduced its fees to be more competitive. 

According to a recent Nilson Report, 99% of businesses that take card payments are now accepting American Express.

Mastercard and Visa have also announced they will be increasing their fees in 2022. They had delayed this increase due to the pandemic.