Merchant Credit Card Fees

Unraveling the Mystery of Credit Card Transaction Fees...

If you are a new business interested in setting up a merchant credit card account so you can accept credit cards you will be faced with a long list of fees and charges. 

. .........Every card processing company operates a bit differently, but some fees are common to all of them. Here are some examples:

 Equipment and software - These fees vary depending on the type of business--traditional brick-and-mortar, mail order/telephone order, restaurant or e-business.

Merchants will need certain kinds of equipment and software in order to process credit cards, debit cards and checks.

Most equipment and software can be either purchased or leased, and prices vary depending on the processor.

 Discount rate - This is the percentage charged on the dollar amount of a sale or a returned transaction.

Discount rates vary and are set according to the type of business.  There are different rates for a traditional brick-and-mortar business, a mail-order/telephone-order business, a restaurant or an e-business.

Discount rates also vary depending on whether a card number is keyed into the point-of-sale terminal or swiped into the terminal. Swiped rates are generally lower because of the data encoded on the card's magnetic stripe, which eliminates key-entry errors.

 Application/setup fee - This is a one-time charge for processing your application and activating your new merchant account. Some times you can get a processor to waive this fee. Tell them you are shopping around and looking for the best deal.  It is a competitive business and they want you as a customer, so they will often waive the fee.

 Address verification service fee (AVS) - This is for fraud prevention.  It provides you with an additional fraud-detection tool to determine the validity of a sale.  This is vital when you make a sale over the telephone or internet... or any time the customer does not have their card with them. 

AVS matches a customer's shipping information with the cardholder's billing address. When addresses do not match, merchants should discuss the discrepancies with their customers before shipping orders. AVS only works with cards that are issued in the United States. When AVS is used, there is a per-transaction fee for the service.

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 Secure payment gateway fee - This charge is assessed to e-commerce merchants to enable them to process transactions securely over the Internet. This is usually a monthly fee.

 Customer support fee - This is a monthly charge is assessed by some credit card processors.  It enables them to provide high-quality customer service 24 hours a day, 365 days a year, often in multiple languages and dialects.

 Monthly minimum fee - This is charged to the merchant if the total monthly discount rate amount for MasterCard and Visa transactions does not reach a minimum threshold. If the merchant reaches the minimum threshold, no monthly minimum is charged. Virtually all credit card processors have this, and it generally ranges from $10 to $30 per month.

 Reprogramming fee - This fee is a one-time charge a processor may assess for converting a merchant from one credit card processor to a new credit card processor.

 Chargeback and retrieval fees - Chargeback fees for a disputed transaction are based on the number of chargebacks posted to an individual account ($10 to $25 per final posting). Incoming retrievals are requests for the original transaction receipt that the cardholder's bank requests. The industry standard is $15 per incoming retrieval.

It is wise to ask for a list of fees a processor may charge before making a commitment.  Have them explaining everything carefully.  Your through understanding of the system will save you headaches later.

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Merchant Credit Card Fees