In an ecommerce merchant account, you have to pay certain fees to maintain it. They are the following: discount rates, transaction fees, authorization fees, statement fees, Address Verification Service fees, batch fees, monthly minimum fees, gateway fees, annual fees, charge-back fees, and early termination or cancellation fee.
Having an e-commerce merchant account puts your business on top among all of your competitors. It does not only give convenience to you and your customers but it also increases your business sales, increases your business’ potential to the global market, and invites lots of customers. But with all its advantages to your business, you may also have to deal with plenty of fees just to sustain and operate your merchant account. You often face your account statement every month but couldn’t really figure out where all these high fees are coming from. Knowing the rates and costs is one way to really understand your account. Given below are some fees associated when operating a merchant account:
Discount rates
The discount rates are the fees that merchants have to pay to their providers for accepting credit or debit cards. It is also a commission earned by the merchant account service every time a credit card transaction is processed. Rates vary according to the business’ criterion. It is categorized into qualified discount rate, mid-qualified rate, and non-qualified rate.
Transaction fees
This fee is specifically charged every time a merchant processes a credit card transaction on his merchant account.
Authorization fees
This fee is charged every time a merchant ask for card authorization to the customer’s card-issuing bank. Whether the transactions are approved or not, the fee still applies.
Statement fees
This fee is also termed as the service fee. These are monthly fees that cover the customer service, and print-outs of reports and account statement.
Address verification service fees
When transactions are made and sent to the card-issuing bank, it will pass through a validation system in which it will check if the address and zip code registered by the buyer if it matches to the information he passed to his issuing bank. This is charged every time merchant validates their customers’ cards.
Batch fees
Batch fees, or also called as batch header fees, are flat fees paid for every batch of funds settled in the merchant’s terminal or when the customer’s card-issuing bank has already transferred some funds to the merchant bank as payment.
Monthly minimum fee
There are merchant account providers that require merchants to meet a minimum number of sales every month. If they can’t meet their quota, a monthly minimum fee is charged.
Gateway fees
They are charged each time online merchants use gateway services for online credit card transactions.
Annual fees
Annual fees are charged solely for maintaining the operation of the merchant account. It could also be paid quarterly.
Chargeback fees
These fees are charged every time a merchant have an unsatisfied customer who wants a refund. The merchant would have to pay for the costs of the transaction so that the refund will be delivered back to the customer.
Early termination or cancellation fee
When a merchant avails a merchant account, he will sign a contract that binds him to the merchant account provider for a certain period of time. If he decides to cancel his account or move to another company in less than the agreed span of time, he’ll be asked to pay an early termination or cancellation fee. This would only cover the start-up expenses of the canceled account.
The fees in maintaining a merchant account varies from one provider to the other. To really get the best deal in having a merchant account, read the contract, policies, rates and costs of the company before you sign up.
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