Merchant Account Fees

If you have decided to sign up for a merchant account and you have been researching the subject, you have probably encountered a number of terms related to different fees that may have confused you. Nevertheless, you shouldn't let such terms unsettle you. By reviewing some of the basic merchant account fees listed below you will be discussing merchant accounts like an old pro in no time whatsoever!

Statement fees: Statement fees are self explanatory. A merchant account supplier will charge you a statement fee every month when they handle transactions for you. The typical charge for a monthly statement fee is approximately 10 dollars, but bear in mind that some merchant account suppliers might charge you more or less, depending on their terms and conditions. Therefore, be sure you understand all of the fees involved before you sign up for a merchant account.

Transaction fee: A merchant account supplier will frequently charge you a transaction fee that is subtracted from every transaction that they handle for you. Currently, the going rate for transaction fees is around .30 to .35 cents per transaction. Thus, if you had 1,000 transactions in a month, at .35 cents per transaction, you would then pay the merchant account supplier 350.00 dollars for handling your transactions for the month. It is important to bear in mind that a transaction fee is not the same thing as a discount fee.

Discount fee: the term “discount fee " refers to the predetermined percentage that a credit card company charges you for each transaction and it is not the same thing as a transaction fee. In fact, you'll be charged both of transaction fee and a discount fee to use your merchant account. For example, if a customer makes a $100 purchase and you are charged 1.9% for a discount fee, you will pay $1.90 for the discount fee plus the 35¢ transaction fee. Thus, your total net profit from the sale will be $97.75.

Monthly Processing Minimum Fee: even if you don't make a single sale all month long, you will still be required to pay a merchant account supplier of monthly processing minimum fee. Again, such a fee is predetermined and supply to you in the terms and conditions set forth in the merchant account supplier's policy. Therefore, to avoid surprises later on down the road, be sure to review the rules and regulations before you enroll.

Set up fees: occasionally you will be required to pay an initial set up fee when you enroll in a merchant account. Further, depending on a merchant account supplier, initial setup fees vary and you will want to be sure to ask a representative to speak to if you will be required to pay a set up fee. Conversely, some merchant account suppliers frequently waive setup fees so that merchants will be enticed to enroll in their program.

Application fee: when you enroll in a merchant account program, you are required to fill an application that is subject to approval. Some merchant account suppliers charge an application fee and it pays to ask a representative if you are required to pay for an application fee. Further, it is important to bear in mind that application fees whether you are approved or not, may be non-refundable. Again, clarifying whether or not you are required to pay an application fee with a representative that you speak to will help you avoid confusion.

In short, by understanding the various fees associated with a merchant account, you can successfully avoid any confusion that you might experience when discussing merchant accounts. What’s more, in fully understanding all of the fees associated with a merchant account, such knowledge makes you a wise consumer and you will be better able to select a professional merchant account supplier. Finally, your awareness of how merchant accounts work will keep you in charge of your business and all of your financial dealings!