Opening a merchant account can be extremely stressful, especially given the fees that are associated. But it doesn’t have to be that way. We’ve heard plenty of horror stories of hidden fees and contracts that lock the merchant in for years. That’s not right. To give you some peace of mind, we wanted to break down fees and rates associated with merchant accounts.
Basic Merchant Account Fees
Discount Rate – Discount rate is the percentage of each sale that the merchant account provider takes. Visa and MasterCard charge their own set fee called “Interchange.” The discount rate accounts for Interchange plus any additional cost they incorporate.
Transaction Fee – Transaction fee is the cost for every transaction. Typically, you will see this run between $0.15 – $0.35.
Monthly Fee – Typically, providers carry a month-to-month fee called a “Monthly Statement Fee.” This varies between providers but should cost you no more than $9.95/month.
PCI Compliance – This is a regulatory fee from Visa and MasterCard, which requires all merchants to be PCI Compliant. This ensures that a business is run with safety regulations in place to protect customers. This should cost you no more than $9.95/month. You can even prepay this annually and save a few bucks.
Those are the very basic fees that will impact your account the most. We recommend asking for these big 4 before analyzing how they will impact your business and making a final decision.
Additional Fees
Gateway – The gateway allows payments to leave your shopping cart and travel to your bank. It’s considered the “engine” to your merchant account. While some providers will point you to a third party gateway, Total-Apps and many others provide their own gateway through a partnership. Monthly fees on the gateway typically run between $9.95/month and $19.95/month depending on the provider.
Value-Adds – You may decide to add certain services to your merchant account such as fraud protection, third-party integration tools, etc. These services all vary in cost depending on the relationship with the service.
Merchant accounts don’t have to be structured in a complicated way. So do yourself a favor and go with a provider that makes things simple. Your provider should have no issue breaking down the fees for you in a quote. If they start to give you hassle or have a hard time explaining certain fees, run. No, seriously. Run!
Still have questions on certain fees or want the inside scoop on what a certain “fee” is that you are seeing on your current statement with a provider? Go ahead and comment below.