by Steffan Perry
Many new merchants are very unaware of exactly what they will be charged from their merchant services provider. Their are many different fees involved, However most merchants only take into account the qualified rate and the statement fee when they are searching for a new merchant services provider. I have listed a few fee's you will be charged and the purpose of these fee's.
Qualified Discount rate.
This is the rate a business will be charged when they process a sale with a debit or check card with the Mastercard or visa logo. Merchant providers usually only advertise this rate on their site to lure new business owners in. For a Retail merchant account you should expect to pay a rate from 1.20% to 1.50%, For a internet merchant account most providers charge 2.00% to 2.90% you should also expect about 80% of your sales to be a qualified transaction.
Mid qualified Discount rate.
This is the rate merchants pay for transactions made with a true credit card or a credit card were the customer is using borrowed money to pay for an item. Most providers will charge around 2.50% for a mid qualified rate.
Transaction Fee.
This is the fee incurred whenever you attempt to process a credit card with your merchant account. You can expect to pay anywhere from 25 to 50 cents for this.
Charge back Fee.
This fee is charged to the merchant every time a customer of theirs disputes a charge from them on their credit card. Charge backs should rarely happen. Usually a merchant only receives about 1-2 charge backs per 1000 transactions.
Payment Gateway Fee.
The payment gateway fee is the cost of using a payment gateway for an internet merchant account. Payment gateways are the internet equivalent to a credit card terminal. Most companies will charge $20 per month for this service and 5-10 cents per transaction.
Address Verification Fee.
The address verification fee or AVS for short, is charge whenever you submit a sale from your internet merchant account. It verifies the customers contact information they submitted at your website with the contact information the bank has on file for their credit card. If there is a mismatch, the payment gateway will notify you alerting you of a possible fraud risk. You can still process the card if the AVS fails. Some merchant account providers will charge a fee for this of 5 cents. however there are some merchant services providers who will not charge for this service.
Wireless access fee.
This fee is only charged to merchants with a wireless terminal. This fee covers the cost of using the cellular network their wireless terminals work on.
Statement/Customer service fee.
A statement or customer service fee not only covers the cost of sending a statement to the merchant each month. It also covers the cost of providing the merchant with 24/7 customer technical support.
What about all the companies offering "Free Services".
There have been many companies now offering "Free gateway Fees" and "Free Statement Fees". Although some merchant may actual waive these fees for larger merchants, most of these merchant providers who offer this simply charge you in other areas to make up the difference. For example, in higher discount rates or transaction fees.
When ever a merchant is shopping around for a new merchant provider. They should take into consideration every fee they will be charged along with the rates. Many merchants only notice the Qualified discount rate and their statement fee and do not take into account other rates and fees. So next time your in the market for a new merchant account, be sure to ask for all the rates and fees upfront.
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