Merchant Account Credit Card

Credit Card Processing Rates

How Much Will It Cost To Have A Credit Card Processing / Merchant Account

One more confusing aspect of credit card processing / merchant accounts is the many fees that you may be subject to. Even though credit card processing rates may be difficult to understand or predict, they require careful analysis. Once you sign up for an account, it is very difficult to change providers, and you may even be liable for a cancellation fee.

Another consideration is that some providers either waive a particular fee, or include it in another one. If waived, they may then recoup their loss by charging a higher rate for another service.

The various rates involved are listed below by category, rather than seperating a merchant account rate from a gateway rate, since in many cases the same company can provide both services.

One-time Fees:

• Setup Fee - $100 to $1000 - Many gateways have eliminated this charge.

Monthly Fees:

• Service Fee - $10 to $35.
• Access or Gateway Charge - $10 to $35 - A fee for the connection to your credit card processing service.
• Statement Fee - $10 to $30 - This is only if you want to receive a paper statement by mail, rather than simply access it online.
• Monthly Minimum Charge - $15 to $30 - If your transaction fees fall below this amount, you will still have to pay this minimum fee each month.
• Reserve - This is a percentage of sales that is withheld as security against chargebacks.

Daily Fees:

• Discount Rate - You will be charged a percentage of each sale, depending on what kind of account you have. There are ususally three levels:
  • Retail accounts, where the credit card is swiped, pay from 1.60 to 1.80%.
  • Card not present accounts ( for a mail order / telephone order business or an ecommerce business ) pay a higher rate of between 2.15 and 2.45 %.
  • A high risk merchant must usually pay an even higher rate.
• Transaction Fee - $0.20 to $0.35 - This is a charge for each individual service provided, such as a sale, a chargeback, or batching.
• Chargeback Fee - $10 to $35 - You should make every effort to reduce chargebacks. These fees can add up fast. And too many chargebacks can place your account in jeopardy.
• Voice Authorization Fee - Fee amount varies considerably. It is charged for each call you must make when your online system or terminal is down.
• Miscellaneous Charges - These fees vary from 1 cent to a few dollars, or they may be a percentage of the transaction. Many of them are charged by the individual credit card companies. An example would be the MaterCard Cross Border Fee of 0.30% for a non-US issued transaction settled in US dollars.

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Equipment Fees:

• Software - If you have a mail order / telephone order business or an ecommerce business, you will need software to communicate with your gateway account.
• Terminal Equipment - In a physical business, you need a credit card swipe machine.

The equipment above can be either leased by the month or purchased outright. Lease agreements vary considerably, but you will usually have to sign a contract obligating you to pay for one to four years. If you decide to purchase the equipment, it will cost $200 and up, depending on the features you want included.

When deciding which services to employ, be sure to consider all credit card processing rates together as a package. Try to estimate what your charges will be for a year, for comparison purposes. And be sure you know all of the fees that you can be charged before committing yourself, to avoid any unpleasant surprises.

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Franchesca

Posted 551 days ago

That's why I like PayPal. They may charge more than a merchant bank would, but I know exactly what I'm going to have to pay them for each item that I sell.

Krysten

Posted 593 days ago

That sure is a problem. They all seem to want to hide some of their fees somehow. They'll say there's no service fee, but then they'll add on some ridiculous charge that you didn't even notice when you signed up to make up for it.

Marivel

Posted 620 days ago

Wow! There ought to be a law requiring these companies to post their rates clearly, and to have consistent names for the various fees. I'm sure not looking forward to doing all the research needed to make sure I'm getting the best rate.

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