Future Finance Solutions
Merchant Services Provider

Understanding Merchant Provider Fees

January 22, 2014 by · Leave a Comment 

Small business understand that they’ll need to pay a fee for processing credit cards online or accepting them through a terminal. The merchant bank has expenses associated with performing the transaction along with a need to make money as a business. But many people don’t understand the nature of the fees associated with working with a payment gateway. This leads to confusion and — in some cases — people feeling like they are being “ripped off” by their merchant bank.

The reality is that the rates and fees that reputable banks like Charge.com Payment Solutions, Inc. charge their customers are very standard. Any processor will be able to explain these ahead of time and you can always find more information in your terms of service. Here’s a quick look at some of the most common credit card processing fees that businesses face:

Discount Rate: The discount rate is the amount of a total transaction that the merchant bank will keep before releasing the rest of the money to you. The amount of the discount rate can vary based on several factors. For example, high risk merchant accounts often have to pay a higher rate than businesses in more stable industries. You might also need to pay a higher discount rate if you accept certain types of “specialty” credit cards such as a “platinum” or “business” card.

Debit Rate: When a customer uses their card as a debit card, the merchant bank charges the business a different rate — usually smaller — than if they used it as a credit card. In some instances, merchant banks will not charge anything for PIN-based debit card transactions. However, make sure you check the terms of service if this is the case; in most instances, they are charging a higher discount rate on credit card transactions to make up the difference.

Transaction Fees: Along with discount rates and debit rates that are based on the total amount of the transaction, merchant banks also charge a transaction fee. This is a set amount that they will bill a business for each transaction they handle for them, regardless of size. The amount is usually $0.25 or less.

Monthly Fees: A merchant bank will also charge a monthly fee to its clients to handle account maintenance. These are things that the bank needs to do in order to ensure that the customer’s account works properly such as customer support costs, preparing monthly statements and network access fees.

————————————————————————————————————————

The preceding article was written by Charge.com Payment Solutions, Inc., a leading source for processing credit cards online or on site. Visit their site to learn more about setting up a payment gateway.

 

Comments are closed.