subject: Merchant Account Fees [print this page] We live in a world of feesWe live in a world of fees. You cannot escape them. Banks, phone companies, airlines, credit cards, government, and others seem to do everything they can to sneak in an extra fee here or there. When setting up a business, the prevalence of fees will become even more apparent. So, it's important to prepare for the fees, plan for the fees, and avoid as many of the fees as possible.
When setting up a credit card merchant account - whether selling in person or online - here are some fees to consider before picking a merchant provider.
One-Time Fees
Application Fee/Set-Up Fee These are the charges associated with processing your merchant account application and setting up your account. Some merchant providers actually don't charge application or set-up fees, so that is something to take into consideration.
Cancellation or Termination Fee Because there are costs associated with processing and setting up merchant accounts, most providers do include a charge for canceling or terminating the service. Before signing up with a provider, be sure to check these details - what merits cancelation, if it's a fixed fee or a variable rate, under what grounds the fee can be waived, etc. - so you're prepared and protected.
Reprogramming Fee If you ever need to make a significant change to any software or equipment, you may be charged a reprogramming fee. This will cover what changes have to be made on the provider's end.
Recurring Fees
Monthly Fee This monthly fee helps cover the regular costs of account upkeep, customer service if you have any problems, your paper statement, or other services. Be sure to find out what is covered in your monthly fee.
Yearly Fee This annual fee could also be considered a membership fee you have to renew each year you continue to use their service.
Monthly Minimum Fee Some providers will charge an additional fee if you don't meet a pre-set monthly minimum. Some providers will only charge you as much as they need so you meet that minimum (e.g. if your minimum is $100 but you've only paid $90, they'll only charge you $10) or if it's a flat rate regardless.
Transaction Fees
Discount Rate Perhaps the most significant of fees is the discount rate, which is a percentage of each transaction. This percentage will be higher for online purchases due to additional risk, and lower for in-person purchases.
Fixed Transaction Fees This can be charged on top of the discount rate and is a flat rate charged for each transaction, regardless of the total price
Reversal Fees If a charge is disputed and overturned, you may be charged a fee. This can happen if a customer is unclear about what they're being charged for or the amount that will show up on their statement. Reversal fees can usually be completely avoided by making sure the customer is well informed.
This is not a complete list of fees, and you should also be aware of hidden fees. Read through the fine print and talk with the provider to make sure your rates won't unexpectedly go up and you won't be charged fees you're not prepared for.
