A merchant account allows sellers to accept credit card and sometimes debit payments. Various businesses offer these to merchants and each has its own fee structure. The types of merchant account fees vary by the provider, but they include things like charges for each transaction, set-up fees, monthly or annual costs, and charges for special circumstances. It makes good sense for vendors to comparison-shop and evaluate merchant account fees to see which companies offer the best deals.
One of the staples of merchant account fees is a charge per transaction. This may vary depending on whether a card is swiped (point of sale) or keyed in, as it would be over the Internet or with telephone sales. Costs may also be different depending on what type of card is being used, such as those issued by the major credit card companies or debits with pins, instead of signature credit cards. The per transaction charge may be a flat number, but an additional charge could be a percentage of the sale, sometimes called a discount rate. Some companies only charge one of these fees and others assess both.
Most merchant companies also assess a one-time set up fee, and then they usually require a monthly payment for use of their services. If receipts are high, the monthly charge may not be applicable, and if sales are very low, one of the merchant account fees that could be assessed is a minimum use charge. Some companies might additionally bill for a daily fee per transaction to transfer money to the merchant’s bank account.
All sales environments may ultimately encounter special circumstances. These include errors in equipment, needing to accept specialized cards, making returns, or customers disputing a charge. Each of these circumstances may involve additional merchant account fees, though they usually don’t happen as often as sales. Vendors should also be aware that some companies demand extra payment for canceling a merchant account.
There are a few practices in offering merchant accounts that can border on the deceptive. Just as with consumer credit card companies, some merchant account companies attract new business by offering very low merchant account fees at first. These teaser rates are then replaced a few months later with much higher charges. When comparing accounts, vendors should ascertain that fees quoted won’t be raised within a few months.
The specific amounts of merchant account fees and their type vary by the company offering the account. In general, vendors should look for companies with a transparent fee structure, with fee levels that fall into the average range and are not teaser rates, and with few extra or special circumstance fees that aren’t being charged by other companies. Some smart shopping in this area provides ways to economize when it comes to accepting credit and debit card payments.