KNOW YOUR MERCHANT ACCOUNT FEES

It is crucial that you know exactly what you will be paying for when you sign up for a merchant account. Technical jargon and pages of fine print are the perfect strategy used by merchant account providers to confuse you and complicate your understanding of the merchant account fees. The following are some of the more common fees that you may be charged. Let us read on and demystify merchant account fees.

Discount Rate

The discount rate is the commission earned by the merchant account provider. It is a percentage charged on every sale and hence, it is an important consideration.

Discount rate is usually lower if the business or the transaction involves less risk. Consequently, card-present merchant accounts charge lower discount rates. However, if the business is risky like an adult website or if the transaction involves more risk like an internet or phone transaction, the discount rate charged is higher. For more information, please go to http://ezinearticles.com/?Understanding-Merchant-Account-Discount-Rates&id=838436

Transaction Fee

The transaction fee is also charged on every sale. It is the cost borne by the merchant to process the transaction. Unlike discount rate, transaction fee is fixed. It is usually higher for card-not present merchant accounts.

Monthly Statement / Support Fee

This is a fixed monthly cost for the monthly statements, customer service and technical support. As these are features that are very important and useful to the merchant, a ten to fifteen dollars charge for the monthly statement or support fee is usually considered reasonable.

Chargeback Fee

If your customer disputes a processed transaction, the processor handles it on behalf of the merchant. The fee charged on this service is referred to as the chargeback fee.

The above-mentioned four fees are the most common set of fees charged on almost all merchant accounts. While discount rate as well as transaction fee are based on sales and monthly statement fee is recurring, the chargeback fee is neither fixed nor regular. It is charged only when the customer has a problem with the transaction due to fraud or unsatisfactory service or product.

On the other hand, the following set of fees may or may not be charged on your merchant account. For example, the annual fee and the monthly minimum used to be obligatory fees charged on merchant accounts. However, as the market becomes increasingly competitive, more and more merchant account providers are ditching such fees. Consequently, merchants now have the option to open up merchant accounts that may charge nothing more or not much more than the above-mentioned four fees.

Application Fee

Some merchant account providers require merchants to pay an application fee to process the application.

Annual Fee

Merchants are charged annual fees by the providers usually to cover their costs of maintenance and system upgrades.

Monthly Minimum

Some providers require the merchants to bring in a minimum amount in discount rates and transaction fees monthly. If the merchant is unable to meet this monthly requirement, he or she will have to pay the monthly minimum. However, if there are sufficient credit card transactions to bring in the monthly minimum or more in discount rates and transaction fees, the merchant will not have to make this payment.

Termination Fee

Some merchant accounts are contract based and if you were to terminate the account, you will be charged a termination fee. However, there are providers who do not charge this fee and are therefore will probably provide you with good service to earn your business daily. You should probably go for them.

It is important for you to note that neither list of the fees discussed nor the length of discussion of each fee is exhaustive in this article. It is only aimed to provide you with a basic knowledge of the common fees you may be charged. It is crucial for you to know exactly what you are being charged as you may lose hundreds or thousands of dollars otherwise.

Hence, please read through the terms very carefully. Most of time, there are many hidden charges and arbitrarily added-on fees that come with merchant accounts. It is your duty to uncover them before signing up for one. Be fussy and ask questions about anything that may be seem confusing to you.

The whole point of opening up a merchant account is to boost your business. Avoiding any unnecessary fees through thorough research can save you money and hence maximize your profits.    

If you are interested to read on more, please visit the following web pages:
http://www.ourshop.org/resources/merchant_fees.html
http://www.costhelper.com/cost/small-business/merchant-account.html