When you open a merchant account, you expose yourself to a plethora of merchant account fees which will decrease your profitability and slow down the growth of your business. These are common terms that you may encounter when setting up a merchant account or reviewing your merchant statements.
The discount rate is the percentage charged for each transaction you process. This varies depending on the type of credit card and the type of transaction.
The transaction fee is charged for the processing of each transaction, whether the transaction is approved or declined. The fee is determined by the type of transaction, e.g. swiped or keyed.
A transaction fee applies to the processing of debit cards that require the cardholder to enter their PIN (personal identification number).
AVS is recommended whenever a card is not physically present, requiring account information to be entered. AVS checks that the address and zip code provided by the cardholder matches the information in the file with the card issuer. This security feature is a first-line defense against credit card fraud.
A fee that is charged when you settle your daily transaction (also known as a batch) with your credit card processor. If you do not have a credit card transaction to settle on a given day, you will not be charged this fee.
Credit card processors charge this fee on a monthly basis. It remains the same regardless of the number of transactions you process and helps to cover the cost of your statement and any customer support you may require.
This applies if you are using the Internet payment gateway. This fee is charged by the Gateway Provider, which may also charge a transaction fee (in addition to any transaction fees charged by your merchant account provider).
Voice authorization fee applies when you use a telephone dial-up service to authorize a transaction. A fee is charged for each call made. Voice authorization is useful in the event that your terminal or software malfunctions or your internet connection does not work.
Your merchant account agreement generally provides a minimum amount of transaction fees that your provider expects you to pay each month. If your monthly fees fall below this minimum, you pay the minimum monthly fee.
You are charged this fee every time your processing system connects to the network. This includes voice authorizations, rejected sales attempts, voids, an error of operator, and invalid card numbers.
A fee charged if you do not return a PCI Compliance Validation Certificate that can be obtained by completing and passing the Annual Self-Assessment Questionnaire (SAQ) and/or Quarterly Network Scan (for traders who store cardholder information electronically or whose application systems are connected to the Internet).
These are three different names for fees related to additional discount charges that apply to certain types of credit cards. They usually include business, corporate, rewards, and international cards.
This fee is a one-time, upfront fee for setting up your merchant account.
This fee is charged for the reprogramming of your existing equipment or software and covers the time and effort of your processor and terminal/software vendors.
Chargeback (or retrieval) fee applies when a cardholder or bank issuer contests a transaction. You are given the opportunity to respond to the dispute with a written response and documentation. The merchant account provider shall mediate the dispute with the issuing bank and shall charge this fee.
The amount charged to your merchant account by the processor on an annual basis.
If you cancel or terminate your merchant account before the date stipulated in your merchant account agreement, this fee will most likely be charged by your provider. However, there is usually room for negotiation, especially in the event that you have unresolved problems or issues that the provider can not or will not solve. The fee is usually a fixed dollar amount, not a variable fee. Check your merchant account agreement on how the cancelation/termination fee is calculated.
This category covers a variety of “surprise” fees charged by some questionable or unrealized merchant account providers. The extremely low “teaser” rates that escalate shortly after you sign your contract are included in this group. Beware of any other hidden fees — including increases in your discount rate without prior notification — that may be included in the fine printing of your agreement. These so-called junk merchant account fees may include security fees, audit fees, conversion fees, over-limit fees, and bill back fees.
Here, the conclusion is very simple. Switch from the traditional merchant account providers who charge you a dozen of unreasonable and non-transparent fees to Payment.Ninja and save a ton of money for you and your business.