If your business is accepting credit cards for its transactions, you need to find the discount merchant account that will offer you the best services for the most competitive price. You need to take into account all of the various fees, not just the qualified discount percentage. While the discount rate is important, make sure you don’t overlook all of the other “incidental fees” while searching for the best deal to match your needs and budget.
Below are some of the other fees you should be looking at when you’re searching for a discount merchant account. If you’re not careful you could be nickel and dimed to death.
The authorization fee is charged when you log onto the merchant account network through a phone line or the Internet to verify that a credit card is valid and has enough credit available on it. There shouldn’t be any charge by your phone company for these calls as most terminals use local or toll free numbers. However, make sure you verify this before signing up or you could end up with an astronomical phone bill at the end of the month.
A transaction rate for merchant accounts is usually anywhere from 20 to 40 cents. Remember, the transaction fee will be added on to the discount rate. However, some merchant service companies will combine the discount and transaction rates as one fee. This is generally known as a bundled rate.
This is typically a small fee which is charged every day to batch or close out all of your transactions for that 24-hour period. These fees usually cost the same as your transaction fee. It is also known as a batch header fee. Remember, if no transactions take place on a given day, you will not be accessed a batch fee for that day.
Monthly Fee (Statement Fee)
This fee will usually run you anywhere from $5 to $20. The charge is used to supply you with a monthly statement that summarizes, breaks downmerchant tools and shows each one of your credit card transactions over that time period. The statements will automatically be sent to you at the end of each month. Make sure you look it over very carefully just in case it doesn’t match up with your records. If you’re lucky, your discount merchant account provider will offer you online transaction reporting. This allows you to view up to the minute information regarding your merchant account.
Be aware that some companies may charge other monthly fees, such as the gateway fee, applicable if you conduct Internet/e-commerce sales. It’s best to find out what the total monthly fee as you compare ostensible discount merchant account providers.
Monthly Minimum Fee
This fee comes into effect only when your monthly sales are very low or you didn’t sell anything at all. The merchant account provider will calculate the charge by multiplying your total sales for the time period by your discount rate and then adding on your transaction fees. It may sound a little more complicated than it actually is in practice. For example, if your monthly minimum fee is $25 and your discount and transaction fees only add up to $20, then you will have to pay the $5 difference to reach the agreed upon $25 minimum. Therefore if you didn’t sell anything at all for the month, you would have to pay the whole $25 as per the contract. Needless to say, a discount merchant account provider should have a low monthly minimum fee or even choose to waive it.