Credit Card Discounts

Credit card discounts refer to the fees that credit card companies charge the retailer for billing and handling. It generally runs between 1 and 3 percent. In running a motel, this is a direct expense that should be on the profit and loss statement. This percentage amount is what the credit card company takes out of the money they send to the merchant after settling charges. For example, let’s say a motel customer charges $100 for a night’s stay. The credit card company has a 3 percent charge for the use of that card. They will charge the motel customer the full $100. However, they will send the motel $97, which is the $100 minus the 3 percent charge. Many credit card companies compete with each other by offering lower discount rates to different customers like motels and hotels.