Everything about Merchant Account Fees
<address>
by Wesley Gordon</address>
<p>
A merchant account allows a business to accept credit cards. Applying
for a merchant account is simple but it's not free. Merchant accounts
comes with different kinds of fees and it is important that you know
what you are paying for.
</p>
<p>
There
are 3 primary fees involved in a merchant account: one time fees,
recurring monthly fees and transaction-related fees.
</p>
<p>
One
time fees are for opening, closing, or changing a merchant account.
It is also known as the registration or cancellation fee. If you are
using a credit or debit card, you may also be paying for charge
backs. Don't forget to ask whether the fee you are paying is
discounted or not. The discount rate is the lowest possible rate that
merchants are charged to accept credit cards. When there is a higher
risk of nonpayment, you will be charged a higher rate.
</p>
<p>
One
time fees also cover the cost for processing your application. The
good news is that some providers do not require application fees.
</p>
<p>
Most
providers will require you to pay monthly fees used to cover costs
and make money and it usually costs around $10. Moreover, some
providers require a monthly minimum fee for your account.
</p>
<p>
Transaction
fees, on the other hand, is the fixed fee portion of each sale. It
usually ranges between $0.20 to $0.30. The good thing about this is
that the transaction fee is fixed. Every time you process a
transaction, you will be asked to pay for the same amount.
</p>
<p>
Aside
from the 3 main types of fees, there are still other fees involved in
having a merchant account. Discount rates are what is referred to as
the sales commission that the provider earns on each sale. Discount
rates vary from one provider to another.
</p>
<p>
You
will be required to pay for a termination fee if you cancel your
merchant account within a specific amount of time. Take note that
some providers require a specific amount of time that you need to
complete before you can change merchant account providers.
</p>
<p>
Merchant
account providers may also ask you to pay miscellaneous fees. Read
the contract carefully, as other special fees may apply.
</p>
<p>
These
are the fees typically involved in a merchant account. To put it all
together, you will probably pay for the following:
</p>
<p>
Total
Charges = Statement Fee + Number of Transactions x (Average Sale x
Discount Rate + Fixed Transaction Fee) + (Number of Charge backs x
Charge back Fee)
</p>
<p>
Since
you will be paying for all of these fees, it is best to choose a
provider that is worth it. Ask your merchant account providers about
their fees, do a little comparison and understand each and every fee
included. Look carefully at the fees and clarify it with the provider
before anything else.
</p>
<p>
(Wesley
Gordon is a 42-year old Online Marketing Director for a Payment
Processing Industry. He's been in the business for over 15 years now,
traveling around the world, attending lectures and seminars. Aside
from spending time with his wife and three kids, he also blogs. His
blog can be seen at <a href="http://acceptcardsnowblog.blogspot.com/">http://acceptcardsnowblog.blogspot.com</a>.
He is also currently updating <a href="http://www.acceptcardsnow.biz/">http://www.acceptcardsnow.biz</a>.)
</p>
