Credit Card Processing Fees Associated with a Merchant Account

Setting up a merchant account for your business can be such an exciting moment. It is another of those steps that says, "Yes, this is for real." In order to be successful in your business venture, you need to be aware of the realities behind those big steps, however. In this case, you should educate yourself about the various credit card processing fees associated with a merchant account.

The actual dollar amounts will vary among the different account providers, so you will need to check with them to get a better understanding of what these initial fees will add up to be.

Getting Started with Your Merchant Account

Some of the first fees associated with a merchant account are the application fee, the set-up fee, and the annual membership fee. The application fee is exactly what it sounds like, a fee that is charged to process your application for the merchant account. Once you have been accepted, you will pay the set-up fee in order to activate the account. Some industries also require a yearly membership fee to accept specific types of credit cards.

Ongoing Credit Card Fees Associated with a Merchant Account

One of the first fees you will encounter is a discount rate. This is a fee charged to you in order for each individual transaction to be processed. It is a percentage of the total amount of the sale. In addition to the discount rate, you will have a transaction fee charged for every sale made, as well. You may also be charged a separate address verification service fee in order for the merchant account provider to double check the address of the customer on every transaction.

Other Potential Fees Associated with a Merchant Account

In addition to the start-up and ongoing credit card fees associated with a merchant account, you may also be required to pay several other fees, depending upon your situation and the account provider. For example, some providers will charge a fee to provide you with monthly statements of your account. There may also be cancelation penalties if you choose not to keep your merchant account. Finally, if your customer disputes a charge or reverses a transaction for another reason, you may end up paying an additional fee.

Your merchant account provider will likely have a monthly minimum that you are expected to pay. That means that despite slow sales, you will still have fees to pay for simply being able to offer your customers the ability to use their credit card. Generally speaking, there are quite a few credit card processing fees associated with a merchant account, and the businessperson would be well advised to shop around to determine what is the best approach for his or her business.