Merchant Account Charges, Fees & Rates

Many new business owners are confused about rates and fees for merchant accounts, and rightfully so. You can spend hours searching the Internet to get answers to your questions. The purpose of this article is to help unveil some of the confusion you may have about credit card rates and fees.

Internet merchant account Setup and purchase costs have drastically fallen over the years, but processing rates and fees for an Internet merchant account have pretty much stayed the same. Also check range of discount rates and transaction fees. Most places charge a monthly gateway fee as well. It is vital that merchant account service providers post properly and clearly all their rates and fees on their web site. Scrutinize the merchant agreement. Scan it thoroughly and raise doubts about those aspects that you are not satisfied with.

There are plenty of merchant service providers on the market that will provide you with the same quality service at a low cost. You might even find a company that doesn't charge a lot of the typical monthly fees charged otherwise. A low cost merchant service doesn't mean that you will be offered poor quality service. Companies that charge a lot for their services are just trying to extract more money out of you.

You should ask your prospective merchant account providers if rates are introductory or fixed. Some merchant account providers will try to give you really super rates up front, then as the months go by they'll slowly increase your processing fees. Be sure rates are fixed and not introductory. Check out whether merchant account providers are willing to put all your rates and fees in writing. Get sure their paperwork shows all rates and fees you will have to pay. They should never keep this information from you.

Find out whether there are any hidden fees. Make sure those fees not mentioned on their web site are shown in their agreement. Ask about any imposition of a cancellation fee if you decide to move to another provider. If the provider is more interested in your business, rather then themselves, they won't impose a cancellation fee. However, not every company values you that highly once you choose to leave it. So, look over their agreement carefully and ask them about cancellation fees. Do you require a reserve to be setup? A reserve is when a provider will hold on to part of your credit card earnings each month, and eventually release them to you later. This should be avoided if at all possible.

Last but not the least, don't get carried away by great rates and then forget about customer service. Customer service is king for long-term success and smooth transaction processing. You don't want to be suffering from busy signals and long hold times. Your time is valuable and downtime will cost you money. Don't get fooled by providers who claim that they charge high rates because of the superior customer support they give. It's true that just might account for a few dollars extra, but paying double or treble fees than the prevailing market rates makes no sense.

Have a quick look at the approximate rates and fees associated with maintaining a merchant account:

Application/Setup: $0 - $100+ (One Time Fee)
Hardware/Software: Purchase: $99 and up
Lease: $20/month and up
Programming: $0 - $100+ (One Time Fee)
Discount Rate: 1.49% - 4% Per Transaction
Transaction: $0.20 - $0.50 Per Transaction
Monthly Minimum: $20 - $25 Per Month
Gateway Access: $0 - $25+ Per Month
Statement: $10 - $15 Per Month
Daily Close-Out: $0 - $0.15 Each Day
Address Verification System (AVS): $0 - $0.05 Per Transaction
Chargeback: $5 - $25 Per Instance