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kiberlain
04-29-2009, 07:51 AM
These are the typical fees you will see associated with a merchant account

Rates will vary from one provider to the other.

Application/Setup: $0 - $100+ (one time fee)

Most providers have an application fee. Some charge it right out at the beginning, while others add it into the solution purchase/lease costs. Some providers do not have an application fee at all.

Hardware/Software: $99 and up or Lease: $20/month and up

One important note worth mentioning here, though leases are sometimes beneficial to you because they keep you from paying up front for a terminal, it's usually much better to purchase from the beginning than pay a lease for the next 12, 24, 36 or 48 months. Why? With a lease you'll end up paying sometimes 3 times or more then if you would of just purchased the solution outright from the beginning. While a $29.95 monthly lease for 48 months sounds good in reality it isn't. Leases are very hard to get out of once started. If your business goes under before the 48 months are up, you still have to pay on the hardware/software costs until the last penny has been received by the leasing company. Also, the lease fee you see
does not include your state sales tax or the amount charged for the damage/loss waiver. If you do go for the lease, always determine the lease's buyout clause, end of lease terms, and especially beware of clauses that allow the lease company to continue charging you even after the 48 months have passed (they say that you should contact them in writing one month prior to the end of the lease, or you can just let them keep charging you).

Programming: $0 - $100+ (one time fee)

This usually only applies to retail merchants who have changed from one provider to another. The programming process isn't difficult but watch out for the cost, some providers may nickel and dime you on programming fees. Why do they charge this fee if you use your own equipment? It's used to somewhat make up for the loss of not selling or leasing you their equipment.

Discount Rate: 1.49% - 4% per transaction

This is the fixed percentage amount that is deducted from the purchase cost. The lower discount rates are for retail establishments while the higher are for Mail Order/Telephone Order (MOTO) and Internet-based businesses. Why the lower cost for retail? The instances of credit card fraud are much lower so banks are able to charge lesser percentages for these types of businesses. A typical discount rate for US business is right around 2.30% for online and 1.79% for retail, perhaps a little higher or a little lower.
Non-US businesses will pay a higher discount rates closer to the 3% to 4% range.

Don't let a few tenths of a percentage point be the deciding factor between two providers. For example, if Provider "A" charges 2.29% and Provider "B" charges 2.49% you'll only save $0.20 for every $100 processed through your merchant
account.

Transaction: $0.20 - $0.50 per transaction

In addition to the discount rate a transaction fee is also deducted from the purchase cost. Also, just as with discount rates, transaction fees are lower for retail businesses while slightly higher amounts are charged for MOTO and Internet
establishments. Address Verification (AVS) may either cost an additional fee, or may be included in the base transaction fee. The typical transaction fee for US businesses is right around $0.30 while the higher end of this fee is sometimes the case for Non-US businesses.

Monthly Minimum: $0 - $25 per month

The fee is based on your transaction and discount rate fees from your credit card sales each month. For instance, say your bank charged $25 as a monthly minimum, the transaction and discount rate fees collected by the bank must equal or go over $25 each month. If this is the case no monthly minimum will be charged. However, if the fees collected for that month do not meet the $25 minimum, you will then be charged the difference. Not all processors have a monthly minimum fee, however most do.

Gateway Access: $0 - $25+ per month

Since in most cases, the secure payment gateway provider is a separate company from the merchant processor, they charge extra fees. For every month that you are on their system, you usually pay an access fee.
The usual fee to pay for gateway access is around $10.

Statement: $0 - $15 per month

The statement fee is charged because at the end of each month you will receive a statement from your processing bank that will list all the transactions that went through for that particular month. It's very much like your credit card or telephone bills.

Daily Close-Out: $0 - $0.15 each day

Associated with software and terminal processing solutions where at the end of every business day you close-out all your transactions. Many providers do charge this daily closeout fee.

Address Verification System (AVS): $0 - $0.05 per transaction

The AVS service checks to see that the billing address given by the customer matches the credit card. If you opt not to use AVS, VISA and MasterCard will not support your transactions and will charge you an additional 0.17% to 1.25% on those sales. Most merchant accounts do have an AVS charge, even if it's bundled with your transaction fee. The AVS service works only with US credit card holders. Currently, there is no AVS service in place for non-US credit card holders.

Chargeback: $5 - $35 per instance

A chargeback occurs when the card holder disputes a charge that they found on their monthly credit card statement. A large number of chargebacks can cause your merchant account to be dropped totally and leave you in a bind when trying to get another merchant account for your business. If this is the case you may not be able to get another merchant account for several years. As a merchant it is important that you take the necessary steps to reduce and potentially eliminate the instances of chargebacks.

Reserve: Varies, ask the provider for details

Some providers will require you to have a reserve account where the amount is determined by your businesses estimated sales receipts. Usually a reserve is almost always charged to a Non-US based merchant who is trying to obtain a merchant account. Also, businesses that do a high volume of sales each month may be charged a reserve fee. Otherwise, there usually isn't a charge. In most cases, the reserve fee is used to cover for any chargebacks on the merchants account. A reserve should be avoided if all possible.

Annual Fee: $0 to $100 per year

Some credit card processors will charge this fee just as additional way to pay for maintenance and system upgrades. This fee usually isn't disclosed upfront. Ask your merchant account sales representative for information.

Oracle
05-19-2009, 09:28 AM
A merchant account is a contract under which an acquiring bank extends a line of credit to a merchant, who wishes to accept payment card transactions of a particular card association brand. Without such a contract, one cannot directly accept payments by any of the major credit card brands. When using an intermediary payment service provider (such as PayPal), the merchant account is in fact held by the service provider itself..........

~ServerPoint~
05-20-2009, 04:30 AM
A merchant account is a contract under which an acquiring bank extends a line of credit to a merchant, who wishes to accept payment card transactions of a particular card association brand. Without such a contract, one cannot directly accept payments by any of the major credit card brands. When using an intermediary payment service provider (such as PayPal), the merchant account is in fact held by the service provider itself..........

Are you copy/pasting that from somewhere? If so you need to point with the link to the source infromation was taken from.
Better explain things in own words

MartinP
06-03-2009, 01:28 PM
Don't forget high risk merchant accounts. For quite a few specific business types, merchant accounts are often difficult to obtain because they are categorized as a "high risk businesses".

These business types include, but are not limited to:

Auctions | Travel Agencies | Pharmacuticals | Gambling | Dating | Telemarketing | Multi Level Marking (MLM) | Cell Phones| Load Modification | Debt Settlement

Most merchant account providers classify these industries a higher risk due to an excessive amount of charge backs, fraud and refunds. Because of these, even if your business does not fall victim to this, merchant accounts for these business types are generally charged higher rates.

Often, the only difference between a high risk merchant account and an ordinary merchant account is the business type. The industry has a list of business types that it considers to be riskier to work with than say... a small retail store where every card is swiped by a live person.

Any time a card is collected over the phone, internet or by mail, it is considered to be riskier simply because it is harder to prove that the person ordering from you is the actual cardholder. Additionally, some specific business types (such as travel, seminars, bail bonds, infomercials, etc) are riskier because an excessive number of cardholder claim they did not get what they paid for and charge the transaction back.

Banks are generally the most difficult place to obtain a high risk merchant account. Additionally, even if they approve the account, their fees and rates tend to be excessive. Third party merchant account providers can usually provide high risk merchant accounts for a variety of reasons, be it in-house risk and underwriting management or the ability to spread an account among various banks.

Additionally, because third party account providers are in strong competition with one another, rates tend to be lower than a bank offering, but still higher than a standard account to offset the risk involved. Some providers charge an application fee, though many do not.

There are two types of fees that make up the majority of the cost. The first is the transaction fee, sometimes called the authorization fee. This is a flat per transaction fee that can run anywhere from $.30 to $.75 depending on a number of factors. The second important fee is the discount rate. The discount rate is a percentage of the amount of the transaction that can vary from 3% and up depending on business type and business financials. Some other fees to keep an eye out for are monthly maintenance fees, statement fees, chargeback fees and monthly minimums.

Anthony Cody
06-10-2009, 01:55 AM
Most of my friends who own online businesses speak very highly of a company called Charge - see link below. They are a third party processor and appear to be very good from what I have heard. I have also done some research on them as well.

footylad
06-10-2009, 01:06 PM
Thanks Cody nice one.

Footylad

rickygips
07-01-2009, 07:19 AM
Great help. You just added a pool of information to someone who is new to these things. Thank you for the added information.

jdizon
11-11-2009, 06:34 AM
The rates for merchant accounts depend on a number of parameters, including the combination of services you need for your business. Our merchant account plans are tailored to provide competitive and fair rates for the merchant card processing you require. Whether it is for a single service type or a combination, we have a plan to fit your needs. colorado merchant accounts (http://www.merchantaccountsllc.com/state-CO.html)

duncan67
11-12-2009, 10:30 PM
Before choosing a merchant provider, first of all understand all of the cost components. Proper research can save you time and money. It is important to apply only to companies that are ready to provide their applicants full consultations before registering.

Roderick66
11-12-2009, 10:50 PM
There are countless ways that a merchant service provider can extract profit from a merchant account. The easiest and most profitable way is by surcharging the majority of their clients' transactions.Anyways thanks for providing informative stuff.

leehaddin
02-09-2010, 07:25 AM
yes what he said is true. For some business owners, fears of seeing their companies' profits swallowed up by fees and extra charges is enough to keep them from accepting credit cards. But a cautious approach to getting a merchant account -- an arrangement with a bank or other provider that will allow your business to accept credit cards -- and a little homework now can help keep those fears from becoming a reality.

BlakeStevens
03-03-2010, 10:09 AM
One thing I've found is that if you're processing a lot of business cards, look at PayPal Pro. They charge a straight 2.2% (or something in the 2's) for all cards. I was getting hit with 5% fees from business cards and that was about all we processed. That 3% savings can be a lot of money!

paolo4930
03-12-2010, 11:25 PM
A merchant account is a contract under which an acquiring bank extends a line of credit to a merchant, who wishes to accept payment card transactions of a particular card association brand.




_______________
Office Furniture (http://www.bucon.co.uk)

Cyclops AV
03-17-2010, 02:58 PM
After some aggravation with the high cost of our Ecommerce merchant account, we went searching for a better plan. It paid off. For our needs EnablePay Direct (http://www.enable-pay.com) offered the best rates, lowest overall cost, and their customer service is fantastic. Their website has some great, straightforward information as well. I would recommend them.

http://www.enable-pay.com

karlandrew
04-19-2011, 06:38 AM
I know this is a year old thread but it really helped me.. especially with blake's post.. however, i am confuse with how surcharging can be profitable..

_____________________
merchant services (http://www.occent.com/)

Wireless Refill
04-19-2011, 07:25 PM
Surcharging is most profitable it can reflect with tax but i do not know about your country

schwa
05-23-2011, 01:35 AM
Hmm, I am still wondering what the poster aims to do.

Poonam
05-27-2011, 01:46 AM
In fact, many merchant account fees apply only to certain types of accounts and others apply only when the account is used improperly.Learning on the exchange will give you the knowledge you need to negotiate your best price of groceries. Interchange is the biggest part of the price of your discount rate. interchange fee is paid to cardholder-issuing banks and the rates set by MasterCard and VISA.

davidtenna
08-19-2011, 03:37 AM
The simplest way of defining a high risk merchant account would be one in which the commodity offered could involve the ease of credit card fraud or the short term turnover of the business in which you decide to participate.

Alferd
03-02-2012, 03:08 AM
Your high volume Merchant Account (http://www.merchantdigital.com/) will be ready for business promptly to ensure that payments can be processed right away for your customers’ convenience and your company’s profit.

mark500
03-16-2012, 01:57 AM
The application fee is not charged by good merchant account providers. Merchant account includes setup fees, transaction fee, monthly and annual fees.

blakedustin595
04-23-2012, 12:23 AM
Before going for a merchant provider, at first understand all the cost mechanism. It is vital to apply only to companies which are ready to give their applicants packed consultations prior to registering.

peterjhon
05-10-2012, 05:37 AM
There are different type of rates apply on merchant account. Discount rates, authorization fee, statement fee, monthly minimum fee, batch fee, customer service fee, charge back fee. Annual fee. These fees are decided by merchant account provider.

davidsharp357
05-25-2012, 02:07 AM
While choosing a merchant, you must keep the cost factor in mind. It will help you to save your time and effort to a great deal.

ronaldostitt39
05-28-2012, 02:12 AM
The third part processors are not directly linked with the site. Many of my friend, who are into online business, refer the name of the third party at the end of the site.

Failsafepayment
05-30-2012, 03:36 AM
The rates you can see on our failsafepayments web page.
We do not hide anything, we are specializing on serving of high risk merchants.

Valdis