Are you tired of credit card processing companies throwing in some unexpected merchant card services fees? Are you confused by the number and types of merchant services fees involved in credit card processing for small business? Do you want to know the pricing for various merchant card processing fees? Do you want to know the fee rate that serves as a safeguard against fraudulent providers? If yes, then read on to learn everything you need to know about credit card processing fees.
Application Fees: Some credit card processing services charge you a fee for processing your merchant account application. Most reputed providers do not opt for charging you up-front. In case your provider charges you an application fee, make sure it is refundable to avoid wasting hundreds of dollars on a rejected application.
Startup Fee: This is the setup fee for creating a merchant account and configuring the credit card terminals. A startup fee of up to $25 is justified.
Statement Fee: Merchant card processing companies usually charge $7-$10 for monthly statements of your transactions at the end of every billing cycle. Statements include the number of cards swiped along with timing and dates on which the cards were used.
Monthly Minimum: To earn some assured revenue during slow business periods, merchant processing companies charge a monthly minimum fee when your transaction fees fall below a certain amount, usually $25.
Transaction Fee: It represents the minimum fee, usually 10 to 30 cents for every transaction. Transaction fee depends on the method of payment.
Discount Rate: It is percentage of each transaction charged by your credit card processing company and normally varies between 1.5 to 3 percent. Discount rate is based on mode of payment and is lowest for debit cards. It successively rises for diner’s club cards, Visa and MasterCard, Discover cards and American Express cards.
Qualified Rate: It represents the minimum discount rate to be charged for most secure transaction types like physical swiping of credit cards.
Non-Qualified Rate: It is about 1-2 percent higher than qualified rate and represents the lowest discount rate for processing least secure type of transactions, like transactions proceeding without address verification.
Batching Fee: This is the small daily fee incurred when you send your terminal-based transactions to the acquiring bank.
Chargeback Fee: You are charged a certain fee for each successful or unsuccessful reversal of charge. Your merchant processing company will allow you to void a few transactions every month before asking you to pay the charge back fee.
Gateway Fee: To enable processing credit cards online, merchant services companies offer web services like setting up and maintaining an online shopping cart for accepting and monitoring credit card payments. Charges for these services are included in your payment gateway that costs around $10 a month.
Authorization Fee: You must pay this fee for every transaction sent to the bank for approval or rejection, irrespective of the outcome. The fee is usually covered within the discount rate but some merchant card services companies charge a voice authorization fee, each time you authorize a credit card over the phone.
Termination Fee: If you terminate your contract before the agreed upon time, usually 1-3 years, you are charged a termination fee of $100-$300. Be wary of credit card processing providers who do not charge a termination way as they may incur the expenses through other hidden fees.
As a general rule of thumb, merchant processing costs you around 2 percent of your total credit card sales volume. Be careful of providers who offer you rates considerably lower than prevalent market rates. Get all credit card processing fees in writing before signing a contract with a credit card processing company to estimate the cost of credit card processing for your business and protect yourself from any hidden fees. Carefully assess the credit card processing costs and its value for your business before making any decision.
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