Merchant credit card processing carries certain fees and percentages the merchant will pay to complete the transaction. Understanding what these fees pay for is crucial when you’re trying to decide which payment processing company to work with. This guide will go in-depth with some of the common fees merchants pay for when they create a merchant account.
Whenever you process a transaction to sell something, even if you accept credit cards online, there is a fee to process that payment. This fee is usually a percentage of the overall sale. The average fee is somewhere around 1-1.5%, but they can very depending on the risk you carry as a merchant.
When you apply for credit card processing, the processor reviews your business and its line of credit. They look for longevity, whether you’ve paid your bills and other factors that are common to the credit industry. If you’re deemed “high risk”, you’ll often pay more in fees. That can be a good thing, though, as it means you have the opportunity to lower your risk by making payments on time. Having a high risk account isn’t the end of the world, but it’s not the best place for a merchant to find himself.
Flat fees separate honest processors from dishonest ones, and they aren’t really standard across the board. It’s quite common for companies to come up with their own names for certain fees, which some believe amount to being charged for nothing. Whether that’s true is probably best left up to lawyers, but it’s not hard to see where flat fees can become a problem.
Generally, flat fees are mostly unavoidable. You should call your credit card processing company and ask them about the common flat fees associated with your account. Some of this information may even be published on the merchant provider’s website.
Flat fees are charged monthly, but incidental fees are charged as the incident occurs. Charge backs are a good example. While not so commonplace that merchants should expect them, charge backs do occur. When they do, there is usually some kind of fee or penalty associated to them.
There are also wholesale and markup fees too. The wholesale, or “base fee”, is the basic fee you’re charged for performing a transaction. Markup fees are named because they represent the company making a markup on your sale (like a commission). These fees may or may not be avoidable, but you should always weight the risks before signing up for a merchant account.
Charge.com Payment Solutions, Inc. has been rated the #1 merchant account provider six years running. To find the simplest and most affordable method to accept credit cards online, visit Charge.com.