Merchant Account Fees

Getting a merchant account can be very confusing if you don’t do your homework before you apply. There are lots of rates and fees you should be aware of because some of them are unnecessary and should be avoided. You want to try to get the best deal for your business before you decide what you will accept. Compare lots of different options, know which rates and fees will apply for your business specifically, and consider what the account will cost you each year or what it will cost you should you decide to cancel your account. When you are comparing, you should look for all of the following rates and fees and see what each of your options will require from you.

Discount Rate
This rate is a specific percentage that will be charged for each transaction made. It will usually take up most of your total costs, so it may be the most important thing to consider when you are looking for a merchant account.

Transactions Fees
A transaction fee is applied to process each transaction made. This charge is required if the transaction is approved or if it is declined. This fee is typically about 20 to 30 cents per transaction, but wireless transactions may be a little higher.
Another type of transaction fee you should be aware of is a PIN Debit transaction fee. This fee is usually about 70 cents and will be applied when you accept debit cards for payment with your business. On the other hand, some processors will actually charge a lower fee for each transaction and then bill you a debit network fee. While paying with a debit card will be very convenient for your customers, you will have to make sure you choose which fees will be worth the cost to your business.

Monthly Statement/Support/Service Fees
These types of fees are fixed and charged to your business every month, no matter how many transactions you have. When you pay this fee, which is usually about $10 to $15, you gain access to a toll-free customer support number that you can call whenever you have problems with your account.

Monthly Minimum Fee
A monthly minimum fee isn’t an actual fee that is charged to your account every month. It is actually the minimum amount your merchant account provider will require that you make every month through these transactions. When your total is less than this minimum amount, then you will be charged for the difference.

Application Fee
This fee is charged to you when you apply and set up your account. An application or set up fee used to be charged for every account application, but now it is much less common. Many providers don’t use this charge anymore.

Annual Fee
This fee is fairly self-explanatory. Every year, your merchant account provider will charge you a specific amount to continue to use their services.

Cancelation/Termination Fee
Most merchant accounts will have some kind of cancellation or termination fee because it costs the provider quite a bit of money to set up and maintain merchant accounts for businesses. This fee will help them get back some of these costs when a business decides to cancel their account. However, some providers will reduce or wave this fee if you are experiencing problems or issues with the system. Make sure you understand the terms involved with this fee and check to see if the amount of this fee is fixed. A provider that charges a variable cancelation fee could trick you into having to pay thousands of dollars in order to cancel your account.