Discount Rate for Merchant Accounts

Discount rates are vital to any business looking to process credit card transactions. The target for any business owner is to find the lowest possible discount rate so that you save on processing fees. Most discount rates range anywhere from 1.69% for retail merchants to 2.49% or higher for internet merchants and even abover 4% for high risk merchants or credit card processors who process credit cards in adult orientated businesses.

Some merchant account providers base your discount rate on your volume and some base it on your credit history and sometimes it is based on both factors. If you have good credit history then you will probably have a really good chance of having a discount rate below 2% depending on your volume.

Discount rates are also determined by VISA and MasterCard as they charge a base rate and then the merchant account provider adds their own fee on top of the base rate to make their own commission for providing you these services.

Did you know that discount rates can affect your business by hundreds and even thousands of dollars yearly? For example if you are charged 2% by one company and you generate $10,000 monthly you pay $200.00 If another merchant account provider offers you a higher rate of 2.50% that is $250 monthly and a difference of $50.00. Over the course of the year that is a difference of $600.00.

For start up companies this cost can be quite significant and that is why it is such a good idea to shop around first before picking up the first company that catches your eye. The industry has improved quite significantly over the past few years and better reputable companies are being to emerge.