What Merchant Charge Can I Expect to Accept Credit Cards For My Business?

If you are like many business owners who want to build up a company and make more money, you have probably heard that accepting credit cards can really give you the boost you need. You may have also heard that accepting credit cards can also come with a heavy merchant charge that you just don’t know if it is worth it to pay. The truth is, it can be expensive to accept credit cards, but almost all businesses will definitely see more customers and watch their profits rise month after month. Knowing a bit more about these different fees and how they work will be beneficial for anyone who is considering accepting credit cards.

If you think there is just one merchant charge that is associated with a merchant account, the back account required to accept credit cards, you are mistaken. There are actually several fees and charges that will be associated with opening a merchant account as well as the charges that you will be expected to pay each month. You will, in most cases, get an invoice from your merchant account holder with this total merchant charge each month, but it is technically made of several fees.

There are actually three main fees that you will see associated with your merchant account. They are the discount rate, the transaction rate and the statement/service fee. Depending on the company you choose to hold your merchant account, there will be other fees as well that will make up your monthly merchant charge. The three mentioned here are simply the most common.

The discount rate is the first of the three that will make up your merchant charge and is not a set fee. This is a percentage of the actual transaction amount. Typically the discount rate runs from 1% - 3% for standard retail transactions. If your discount rate is 2% and your customer spends $20.00 at your store, you would owe $0.40 to your merchant account holder for the discount rate.

The second fee that you will almost positively see is called the transaction rate. Unlike the discount rate, this is a set rate and tends to fall anywhere between the $0.15 and $0.30 range. For examples, that same customer above, who spent $20.00 in your store will cost you $0.40 for the discount and up to $0.30 for the transaction rate, so you will now owe $0.70 to your merchant account holder as the merchant charge. If you have 10 customers who all spend $20 in one day, that would be about $7.00 a day in those fees.

The two fees mentioned above are not the only fees, however. You will also, at the very least, likely have to pay a statement fee, or sometimes called a service fee. This is the charge for putting your statement together each month. It typically runs from $10 - $20 on average.

As you can see, there are several charges that will be attached to your merchant account in order to accept credit cards, but even with the addition of these fees, it is important to remember that most people make such a profit when switching to credit cards, they don’t feel the burden of these fees at all.