Merchant Accounts and The Fees That Come With It
Your business can be taken advantage of with unnecessary costs from your credit card processor. The aim of this article is to understand how the merchant account-pricing model works and why it’s important to be mindful about it.
Card processing companies allow merchants to process payments for a small fee. However, some companies will take advantage of merchants, adding extra and unnecessary charges. When you are shopping for merchant accounts, the fees are probably one of the most important deciding factors. The problem with these fees comes when they’re not disclosed and you’re not expecting them. Therefore, it is wise to gain an understanding of the various fees often charged by credit card companies. The following are some of the most common fees:
- Hidden Transaction Fees: In virtual cases, you can expect to pay 10-20% whenever your customer swipes a card; even if the transaction is not accepted. If the customer keys in the numbers, you’ll be paying anywhere from 25 to 30% per transaction.
- Payment Gateway Fees: Apart from the fee that a merchant has to pay for using a payment gateway, make sure you understand that the provider might charge for every transaction.
- Monthly Minimum Fees: If you do not reach this minimum, you will be required to cover the difference.
- Annual Fee: This is paid once a year. The company charges you this fee to administer your account and handle the transactions.
- Setup Fee: Your company may levy this fee to cover the cost of processing your application and opening your account. Increasingly, however, in most cases, providers do not charge for these services.
- Chargeback and Retrieval Fees: These fees only occur when a customer contacts the bank to dispute a charge.
- Termination or Cancellation Fees: This only happens if you breach or terminate your contract. If possible, choose a credit card processing company that does not charge termination fees, as variable ones can turn out to be extremely costly. However, not every provider charges this fee.
- Statement Fees: This fee is for a monthly paper statement. However, it is not taken generally.
- Fees for Half-Qualified and Non-Qualified Cards: This is by far the most unknown fee to many merchants; credit cards fall into different tiers and you pay higher fees for some than the others. Rewards cards, for example, often fall into the half or unqualified categories and generate higher fees to the merchant.
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Ultimately, the key to a successful merchant account is full disclosure. Choose a credit card processing company that is transparent about all the fees they charge.
If you have a similar question or more, get an expert at Merchant Strongholdat the toll-free number +1 (727) 330 – 3944. We also provide credit card processing solutions and high-risk merchant account services.