Frequently Asked Merchant Account Questions and Answers

1. What other fees are involved not listed on the site?

Eventhough opening a merchant account costs money it will make your business more money in the end. You will be able to provide another means to accept payments from customers. The cost associated with having a merchant account is small compared to not being able to accept payment from a customer. It is better to make a $100.00 sale and pay $2.00 for the transaction then not getting any money at all.

Having a merchant account for your business is one of the best investments you will ever make, we provide a variety of options on the site to help limit the cost to you. If you visit the "compare rates" page you will be able to see which merchant account provider will work best for you. Listed below are other fees associated with having a merchant account sometimes not listed on the providers website.

Application fee - Most of the time this fee is waived but in some instances there is an application fee which is usually lower then $100.

Discount rate - A discount rate is the rate that is charged on the total sale. So for example if the discount rate is 1.70% and you made a $100 sale, then the merchant would charge $1.70 to process that transaction. There are two types of discount rates listed below, and are based on the type of business you have.

Card present - Retail merchants who have a swipe machine or commonly referred to a Point Of Sale terminal are eligible for lower discount rates then internet merchants because they see the physical card which substantially lowers the risk of fraudulent spending. usually the discount rate is between 1.69% and 1.99% for card present transactions.

Card not present - The other type of discount rate is for internet/mail/phone merchants who process the credit card transaction without actually physically seeing the card. The credit card is manually keyed in the terminal or software program Because these types of transactions present more risk for the processor there are slightly higher fees. You will probably find discount rates ranging from 2.19% to 3.99%.

Transaction fee - When a processor dials into a network to verify that the credit card is valid this is known as a transaction fee. Most transaction fees are .25 cents but can range as high as 40 cents if it is an internet or online transaction. The cost covers the terminal dialing out through the internet or phone line. Also, there is no charge from the telephone provider as the call is usually local or a toll free number that is dialed from the terminal.

Just to give you an idea of the fees you would be paying with the merchant account we will provide a simple sample. So to start let's say your discount rate is 1.69% and your transaction fee was .25 cents. If your customer paid you $100 then you would pay a total of $1.94 to process that transaction. The discount rate charge would be $1.69 + the 25 cents to process the transaction is equal to $1.94.

At the end of the day you will want to batch all over your transactions together what essentially means is deposit all of your transactions together. The total cost assoicated with batching the transactions ranges from 25 cents to one dollar and includes the charge of bundling all of your transactions together.

Statement fee - A detailed list of your credit card processing transactions are detailed in your monthly statement. The fee associated with recieving this report ranges from $5.00 to $20.00 with $9.95 being the average. There is a lot of information that is displayed in the statement and it may be beneficial to call your processor to understand how it is detailed as some statements can be pretty confusing.

In some cases there are processors who have online reporting available where you can view them online. As well it is possible it updates immediately providing real time transaction reporting. The customer service department can answer any questions regarding your monthly statement.

Customer Service Fee - There are some merchant account providers who charge a monthly fee for the service they provide. Usually these types of companies rarely charge a monthly statement fee.

Monthly minimum - The monthly minimum is the lowest amount you will pay the merchant for having them provide your merchant account. If for example your monthly minimum was $25.00 and your fees totalled $18.00 for the month then you would pay the difference which in this scenario would be $7.00. How the monthly minimum is calculated is by adding the total amount you paid in discount rate fees as well as transaction fees. If the amount is lower then the monthly minimum you will pay the difference, if it is higher then the monthly minimum then no monthly minimum fee is assessed. Here is a sample below.

Example: Retail Business – Discount Rate is 1.89% + .25 cents per transaction.

$1,000 x 1.89% = $18.90.

10 transactions x .25 = $2.50

$2,000 x 1.77% = $35.40

10 transactions x .25 = $2.50

As you will see you made the monthly minimum so therefore you don't need to pay the difference. Your monthly minimum charge would be $0.00

1. What exactly is a Merchant Account and do I really need to have one?

2. What other options are available ?

3. Is it necessary to accept credit cards ?

4. When I make a credit card sale how do I get the money ?