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What are The Various Fees Associated with Merchant Accounts?

by zoya aryaJanuary 19, 2023
merchant accounts fees

Introduction

As a merchant, you want to be able to accept credit cards and other forms of payment. But you also don't want to pay fees that make accepting payments difficult or expensive. Luckily, there are many different types of merchant accounts fees available today that help small businesses like yours keep costs down while still making sure that your business can stay afloat. In this article we'll go over some basic information about what fees can be associated with a merchant account so that when you choose one for your company, they know exactly what they're signing up for

Basic account fees

  • Monthly Fee: The merchant account provider will charge you a monthly fee for the privilege of being on their network. This is usually $30 to $60 per month, but can vary depending on which bank or credit union is associated with your merchant account.
  • Annual Fee: If you have more than one year left in the contract (usually three), then additional payments are required every year that go toward renewing your contract and covering any additional costs associated with operating an online store for years to come. These fees tend to be around $100 per year but can also vary depending on what kind of plan you choose from among all those offered by various banks and credit unions out there today!
  • Setup Fee: This is an upfront payment made at the beginning when signing up for service; this fee ranges anywhere from $500-$1000 per month depending on how much money needs investing into your business before moving forward full steam ahead!

Discount rate

Discount rate is the percentage of the transaction amount that you will pay to your bank. It is usually a flat fee, but can vary based on which type of card has been used. For example:

  • If you use Visa, then your discount rate may be higher than if you had used MasterCard or American Express instead. This is because Visa charges a higher interchange rate (transaction fees).
  • Conversely, if your business uses Amex and Chase statements instead of Visa statements then your discount rates would be lower than if those statements were issued by other banks such as Bank Of America or Wells Fargo Bank.

Monthly minimum fee

The minimum monthly fee is a fixed amount that you pay to your merchant account service provider every month. This fee is charged regardless of how many transactions you process, and it does not change even if the discount rate changes.

For example, if your merchant account provider charges $1 for its service and offers a discount rate of 2%, then their minimum monthly fee would be $20 ($0.20 x 100%). However, if they changed their discount rate from 2% to 3%, then their new minimum monthly fee would still be set at $20 ($0.20 x 200%).

Subscription fees and services charges

Subscription fees and services charges are typically charged annually for the merchant account, but may be charged monthly for certain types of accounts. The amount of these fees depends on your merchant account provider. These fees will be listed on your application form or website as an annual or monthly subscription fee.

The amount of a subscription fee can also vary depending on the type of credit card processing agreement you have with each merchant service provider (MSP). For example:

  • If you're using Stripe's PCI-DSS compliant payment gateway, then they charge $0 annually per merchant account; however, if you want to accept Apple Pay as well as other forms of mobile payments like Google Wallet or PayPal Here! then they will charge additional fees based on how many types of payment methods they support per month.*

Per transaction charge

A per transaction charge is the cost you pay to your bank or credit union for each individual transaction. This can be confusing, because it sounds like there's one fee for all transactions, but in reality there are multiple charges depending on the type of account you open and the type of merchant services you use.

For example: If an online retailer uses a debit card issued by First Data International (FDIC insured) with their Visa Signature program, they'll have a standard setup fee plus monthly maintenance fees that add up to $12 per month (as compared to $7-$9 without FDIC insurance). This means that if they want to pay off their balance every month instead of notifying their customer until they've used up all available funds in their checking account after making purchases online using this debit card linked directly through Visa's website—which could take weeks—they'll have significantly higher costs associated with doing so because FDIC insurance protects against losses during consumer disputes over unauthorized transactions made using cards issued by FDIC-insured financial institutions."

Wireless transaction fee

If you're a merchant that has a lot of wireless transactions, the merchant account provider may charge you a higher fee to cover their costs associated with processing those payments. This is not always the case but it can happen and it's important to understand why this happens before deciding whether or not it's worth paying these extra fees.

The wireless transaction fee is charged on a per transaction basis: if you have 100 transactions with each costing $10, then your total cost would be $100 ($100 x 100).

Retrieval request fee (chargeback)

Retrieval request fee (chargeback) is a fee that is charged when a customer disputes a transaction, such as when you accidentally give them the wrong amount of money. This can happen because:

  • You didn't fully understand how the system works and gave them too much money or too little funds were deducted from their account.
  • They mistyped their address when they made a purchase online and you sent it to the wrong location.

The retrieval request fee will vary depending on your account type and which payment processor you use for processing transactions. However, it's usually about $15-$25 per transaction. This includes both merchants' costs associated with chargebacks as well as banks' fees for handling them (which typically range from $0-$10).

Online reporting fee

The online reporting fee is a small fee that you pay to your bank or credit union for each transaction. It covers the costs of processing the information and providing it to you in a format that's easy to use.

The average merchant account has an annual fee, which includes this service. However, there are some accounts that don't charge it at all, so if you're looking for one of those options, keep this in mind when choosing an account provider!

Things That Get Charged for Merchant Accounts

  • Merchant accounts are a service. They're not free. They come at a cost, and that cost varies depending on the merchant account provider and the type of business you run.
  • There are many different types of fees associated with merchant accounts—and each one can be confusing to understand. Here's what you need to know about them:

Conclusion

We hope this article has helped you understand what fees are involved with merchant accounts. It's important to know how much money you're spending on these services so that you can make an informed decision about whether or not they are worth it for your business. If so, then go ahead and sign up with a provider like us! We offer competitive rates and friendly support staff who can help guide you through the process of setting up your account and getting started with tracking sales data in minutes (not days).

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