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The Merchant Account Rate (or, What Are All These FEES?!!)You cannot be careful enough when analyzing the fees associated with your merchant account rate.
It's really amazing to
see all the creative
charges they come up with.
Ok then, let's roll up our sleeves and go through each one of these fees affecting your merchant account rate.
If your application is denied, part or all of the application/setup fee may be refunded. Always check with the bank or provider BEFORE applying.
For example, if you transact a $100 order and your discount rate is 2.5%, you will receive $97.50, while your bank/provider will keep the $2.50. This rate is typically higher for internet merchant accounts due to the greater risk of fraud.
Monthly merchant account fees vary widely and may or may not include statement and customer service fees. Some will also include gateway and software fees (though this is less common).
This can be a monthly or per transaction fee.
Yep, it's one of those merchant account fees we all hate. And guess what? This is in addition to the fact that you'll have to refund the purchase amount (nothing like paying a fee for the privilege of giving your stuff away, huh?)
FYI: if you operate an online business only, you do not need a swipe terminal so make sure you're not paying for one! Also, a personal recommendation: Don't lease equipment or software unless you must. Either purchase outright, or make payments toward owning it. And a reality check: Sometimes, a provider/bank will seemingly give the software away--but typically they will make it back and then some in higher transaction and discount rate merchant account fees. Be wary.
Is this list exhaustive? It may be exhausting to look at, but NO! There is no end to the fees that make their way into your merchant account rate out there (and you thought the phone companies were bad!). And
please be aware that lower
fees in one area are almost always offset by higher fees in
another part of the merchant account rate. Rule of thumb: If it seems too good to be true, it usually is. This is certainly true in the transaction processing industry. In addition, there may be a ...
Be very, very aware of this and be realistic about your expected volume. For example, if your monthly minimum is $20 and the total fees you pay on transactions in a given month is only $15, you'll be required to pay an additional $5 to cover the minimum. And one more thing to consider... Some merchant account providers may have you sign a contract for a minimum period of time. Sometimes the merchant account fees can be outrageous, but to break the contract is to incur a stiff penalty. MAKE SURE YOU AREN'T GETTING LOCKED INTO A CONTRACT YOU DON'T WANT! READ THE FINE PRINT! Sorry about all the yelling, but it's a terribly important point.
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What is inexpensive?!An inexpensive merchant account is...
Competitive pricing:*internet/mail/phone2.25% discount rate 25 cent transaction fee Retail (face-to-face) 1.85% discount rate 25 cent transaction fee Gateway fee $17 month Statement/service fee $10 month If you are considering several merchant accounts and the prices are in this range, stop using price to compare. It's time to compare service, support, features, etc. Look beyond price.
*These rates are taken from Charge.com.
Thank you thank you thank you!This site is just what the doctor ordered. Thanks for keeping me from makeing [sic] a big mistake! James Adair, |
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