Merchant Processing Fees
When you set up a merchant account with a payment processing provider in order to accept credit cards, there are a number of merchant processing fees you can expect to pay. These fees are quite confusing and though most are legitimate, there may also be some hidden and junk fees you may not have to pay if you play your cards right.
The discount rate is a merchant processing fee you will always need to pay. It will make up the majority of your costs when paying for the ability to accept credit cards. The discount rate is the fee you pay that is a percentage of every charge made by credit. For instance, if your discount rate is 2%, you will pay 2% back to your payment processing provider. If a customer spent $100 on one transaction, you would pay the payment processing provider $2.00. This is a non negotiable rate and is on average between 2% and 3%.
The transaction fee is another merchant processing fee and again, is not negotiable. This fee is also charged per transaction and is typically anywhere from $0.20 and $0.30 per credit transaction. In other words, each time your customer swipes their card, you will spend from $0.20 to $0.30 depending on your transaction fee.
The monthly statement or support fee is another non negotiable fee. This is a flat rate, usually between $10 and $15 per month. You pay this fee for access to your payment processer’s customer service line and your monthly statement.
The other non negotiable fees for merchant processing are the set up fee and annual fee. These fees can range from $50 to several $100s depending on the company you are working with and your individual needs as a company.
There are plenty of fees that are charged for merchant processing that may be optional or you may be able to totally negotiate these fees away. Some of these you may have heard of or recognize are: PIN/Debit fees, address verification fees, internet gateway fees and the voice authorization fee. The PIN/Debit fee is only charged if you accept debit cards and then, only if the customer uses the PIN pad. This is a fee like the transaction fee that is a set rate, like $0.20 per transaction.
The address verification fee is only for merchants who manually enter their customer’s credit card numbers. If you swipe cards, you will not have this fee. It is usually $0.05 - $0.10 per transaction and helps reduce fraud on charges for both you and your customer. Internet gateway fees and voice authorization fees are also not charged to all merchants and are only for those who enter information online or via the telephone. Internet gateway fees are bulked together and are $20 - $30 per month on average. The voice authorization fee is approximately $1.00 each time you call.
As you can see from the above information, merchant processing can be very confusing. Though you may think it is ridiculous to be charged all of these fees, but most merchants agree that it is worth the fees to get the extra profits your happy customers will bring in.
