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Follow on Google News |  How do Merchant Account Rates and Gateway fees work?Welcome to the confusing world of e-commerce. If you haven't found enough to get your head spinning, merchant account fees might just put in that final twist.
By: Kevin Sarisky Though at first glance it can look like a foreign language, there is a bright side: most merchant account providers speak the same language. Once you understand the parts that make up the standard pricing breakdown you should be able to make good comparisons. There are 3 primary parts to the standard merchant account fee structure: 1. One time fees 2. Re-occuring monthly fees 3. Transaction fees There are also the same items that apply to the payment gateway fee structure: 1. One time fees 2. Re-occuring monthly fees 3. Transaction fees The more sophisticated merchant account providers are able to bundle at least one of the most popular gateways into their packages. This not only allows for one stop shopping for the person looking for a merchant account, but also bundled billing and usually better pricing. One time application and setup fees for both are often combined in these cases. Let's look at an example: Merchant Services offers a new account with the following: One time fees: Merchant Account Setup: $149.00 This fee might break down as $100 for the application fee and $49 for the gateway fee. It may also be $149.00 for the merchant account setup and $0.00 for the gateway setup (depending on the relationship the merchant account provider has with the gateway provider). The actual breakdown is not published and is not important to us except in some cases the application fee is non-refundable. In those cases (if pricing is available online) the breakdown is published. Reccuring fixed monthly fees: Monthly Gateway Fee $10.00 This is a fixed monthly fee that virtually all gateway providers charge (the actual rate may change though this rate is very good). This fee is for the use of the gateways transaction processing services and usually includes items such as online payment cancelations and transaction reports. Monthly Statement Fee $9.95 This is a fixed monthly fee that virtually all merchant account providers charge (the actual charge may change though this rate is also very good). This is a handling fee and though it is called "statement fee" by most merchant account providers we have seen it called "Monthly Service/Support/ Recurring variable monthly fees: Discount Rate (MasterCard / Visa) 2.29% This is a percentage of each transaction amount that is typically charged by the credit card company. It also usually includes a percentage for the merchant account provider. The monthly amount of this fee depends on the transaction amounts processed during the month. Some merchant accounts have a monthly minimum discount fee (around $25.00) that you would pay if the discount does not reach that level. Some merchant account providers offer a tiered discount rate that will drop down after reaching a specified level. Per Transaction Fee (applies to each transaction) This is a "per transaction" Summary Though the actually amounts and rates for the above items may change, the inclusion of these items is fairly standard. If you are comparing costs it is a good idea to give an example to the sales rep and ask them for a complete breakdown. Using 1,000 transactions at $10 each should give you a good comparison figure. Other than pricing, you should always ask whether or not the application fee is non-refundable and if there are minimum transaction fees. Contact: Kevin Sarisky Merchant Solutions 2239 West 190th Street Torrance, CA 90504 Tel: (424) 212-9500 Fax: (310) 928-4195 ksarisky@merchantsolutionsiq.com http://www.moourl.com/ # # # Merchant Solutions IQ (MSIQ) has broken the mold for credit card processing accounts, setting up merchant accounts without the high fees and arbitrary overcharges. Providing free black & white rate comparisons. http://www.nabancard.com/? End
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