Understanding Merchant Account Fees

by Joe Smith

Every business needs to be able to take credit in order to survive. Let’s face it, America runs on credit! Not setting up a merchant account can cost you many potential customers. So why don’t you have one?

It can be confusing, and overwhelming when trying to set up an account when you are facing unfriendly merchant account fees. Let’s try to clear up some confusion with some simple explanation of these complicated fees. We will only discuss a few fees here.

Monthly Minimum Fee – A monthly minimum fee is not an extra fee but rather a minimum amount that the processor or merchant account provider needs to have in fees. As long as your credit card fees meet or exceed this minimum, you are not charged any extra fees. However, if your monthly fees are less than this minimum, then you are charged the difference up to the minimum. For example, if you have $20 in fees in a given month, and your account has a $25 monthly minimum on it, you will be charged an additional $5 to meet the monthly minimum. A monthly minimum is a reasonable fee, although sometimes you can get it reduced somewhat if you expect your monthly volume to be low.

Monthly Statement/Support/Service Fee – The monthly fee is charged by your processor or merchant service provider and is a fixed fee, regardless of the number of transactions you have. This fee provides you with a monthly paper statement as well as any 800 toll free customer assistance/support you may need on your account. Usually this fee is around $10 per month but can be as high as $15. This is a reasonable fee and it is normal to have this fee on every merchant account.

Internet Gateway Fee – This only applies if you are using an Internet Payment Gateway, such as Authorize.net. It does not apply if you are using software or a terminal. The gateway fee is a monthly fee assessed by the gateway provider, and is usually billed directly by the gateway provider, although sometimes it can be billed through your merchant account by your processor. The gateway fee can be as high as $30 per month. Sometimes there can be an additional per transaction fees that the gateway provider may charge. This is in addition to any transaction fees charged by your merchant account provider.

Reprogramming Fee – This is charged if and when you need to reprogram a piece of existing equipment or software. It does take time and effort to program a terminal, as well as software, and as a result this fee is sometimes charged by merchant providers and/or terminal or software vendors.

Understanding merchant account fees helps to understand merchant accounts and why you should get one. Don’t let fees get in the way of something that could help your business grow.

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