Every Merchant Account Provider has different rates and fee structures.
It is important to understand all the rates and fees to make sure you are getting the best Merchant Account for your business.
Here are the explanations
Application/Set up fee:
Range $0 - $100+
Some providers charge an application fee. This is a one-time fee for submitting the application and setting up the account. Some providers do not charge this fee.
Discount rate:
Range 1.5% - 4%
This is the fixed percentage amount that is deducted from the purchase cost. The lower discount rates are for retail establishments while the higher are for Mail Order/Telephone Order (MOTO) and Internet-based businesses. Why the lower cost for retail? The instances of credit card fraud are much lower so banks are able to charge lesser percentages for these types of businesses. A typical discount rate for US business is right around 2.30% for online and 1.79% for retail, perhaps a little higher or a little lower.
Transaction fee:
Range $0.10 - $0.50
This is a fixed fee charged for every transaction that is processed. It is not a percentage so it does not matter what amount the transaction is. It is higher for online than for retail just like discount rate.
Statement fee:
Range $0 - $25
The statement fee is charged at the end of each month. At this time, you will receive a statement from your processing bank that will list all the transactions that went through for that particular month. It's very much like your credit card or telephone bills.
Monthly Minimum:
Range $0 - $25
This fee is based on your transaction and discount rate fees from your credit card sales each month. For instance, say your bank charged $25 as a monthly minimum, the transaction and discount rate fees collected by the bank must equal or go over $25 each month. If this is the case no monthly minimum will be charged. However, if the fees collected for that month do not meet the $25 minimum, you will then be charged the difference. Not all processors have a monthly minimum fee, however most do.
Batch fee:
Range $0 - $0.15
Associated with software and terminal processing solutions where at the end of every business day you close-out all your transactions. Many providers do charge this daily closeout fee.
Gateway fee:
In some cases, the Secure Payment Gateway provider is a separate company from the Merchant Account Provider, they charge extra fees. For every month that you are on their system, you usually pay an access fee.
The usual fee to pay for gateway access is around $10.
Charge Back fees:
Range $5 - $35
A chargeback occurs when the cardholder disputes a charge that they found on their monthly credit card statement. A large number of chargebacks can cause your merchant account to be dropped totally and leave you in a bind when trying to get another merchant account for your business. If this is the case you may not be able to get another merchant account for several years. As a merchant it is important that you take the necessary steps to reduce and potentially eliminate the instances of chargebacks.
Annual fee:
Range $0 - $100+
Some credit card processors will charge this fee just as additional way to pay for maintenance and system upgrades. This fee usually isn't disclosed upfront. Ask your merchant account sales representative for information.
