Payments Systems – Why Credit Card Processing can be so Expensive

Our analysts have been searching high and low on the internet for the types of credit card processing that bed and breakfasts use.  Services like Securepay or RezOvation are touted.  RezOvation does not actually provide credit card services, but facilitates links to external merchant processing solutions.  But why are these solution so expensive?  Read on below for the answer.

Instant World Booking ( now offers IWB Payments.  This system is unique among all the other providers in that it requires:

  • No merchant accounts
  • No payment gateway
  • No bank or credit applications
  • No credit card processors

In short, IWB Payments handles all the complicated and otherwise costly processing for you.  All you need to do is charge your guests with convenience and confidence.  Read more about IWB Payments here:

As for the other services, merchant and credit application fees, discount fees, address verification fees, payment gateway fees, monthly reporting fees, setup fees, monthly service fees, pci compliance fees, etc. can add up quickly.  And yes, you will be charged most if not all of these fee categories for credit card processing.  This is not to mention the complex process of handling cardholder disputes, and a chargeback fee (about $30 or more) for every disputed transaction.

With external credit card processing used by services like Securepay, RezOvation, and others these fees are billed in bits and pieces, and it can be difficult to add them all up.  This is why you may be surprised to learn that these costs in some cases can add up to 10%-15% or more of your monthly charge volume.

Here’s just one example of how credit card processing costs can add up for a bed and breakfast or inn.  Consider a simplistic example.  Let’s say a bed and breakfast charges 10 per month.  The average discount rate or their charges is 4%.  This is not the total cost of processing, of course, but just one of the cost categories mentioned above.  Now, if just one of the 10 charges for a month is disputed by the guest, the amount charged is automatically returned to the guest by the credit card processor.  However, the discount fee is NOT returned to the bed and breakfast for disputed charges.  This means the overall discount rate for the month goes from (10 transactions x 4%) / (9 successful transactions) = 4.44%.  So, the average discount rate for the month increases from 4% to 4.44%.  That’s an 11% increase.  This of course does not include the non-refundable $30 chargeback fee that the bed and breakfast will be charged for the dispute.

IWB Payments is a simple to use credit card acceptance program that may be right for your bed and breakfast or inn if you want to avoid the administrative headaches and high costs of maintaining your own merchant processing account.

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5 Replies to “Payments Systems – Why Credit Card Processing can be so Expensive”

  1. I’ve never heard of anyone paying even close to a 4% discount rate. That’s bordering on insanity. A bed and breakfast is a card present environment, which means they’ll get better rates than say an online ecommerce website, which is card not present. I have a card not present set up and my discount rate is 1.9%. Today it is easy to find processors that only charge Interchange.

  2. Thanks for the comment. The accessibility of credit card processing varies greatly from region to region. While a 1.9% rate may be achievable, this is certainly not the case if you’ve ever had a customer from outside the US. By definition, credit card companies charge non-qualified discount rates for international cardholders (this means higher rates). IWB is a global provider with global clients. When talking about bed and breakfasts being card present environments, this may be the case in the US. However, there are many “countries” that are “card-not-present” countries. So, aggregate credit card processing costs of 4% – 10% are not unheard of.

  3. Hello,

    I’m interested in placing a promotional link on your page:

    The link would be for a website which is about Online payment System.
    I don’t have the biggest budget, but hopefully there is a reasonable price we could arrange.

    Please let me know if you’re interested, and if not thanks for your time.



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