As a business owner, it is important to set up a merchant account to help you keep track of your transactions and to allow you to process credit cards for your customers. At the same time, there are many fees associated with merchant accounts that need to be considered when setting up an account. By carefully comparing merchant services, however, you will be able to set up the account that will be the most cost-effective for your business. Authorization Fees Every time a transaction is sent to the bank that issued the card, an Authorization Fee may be charged to the merchant account. Even if the request is declined, the authorization fee may be assessed to the account. It is important to note that this fee is not the same as the Transaction Fee or the Per Item Fee that may be also be assessed by merchant services. Both of these fees are charged by the merchant services rather than charged by the bank and passed on to the merchant. Statement Fee A Statement Fee is a regular monthly fee that may be assessed to the merchant each month. This fee will appear on your monthly statement, which is a record of the transactions that took place that month as well as all of the fees that have been assessed. This is not the same as the Monthly Minimum Fee. Some merchant services require their customers to charge up a certain number of fees each month based on the transactions that are completed. If the merchant fails to meet this minimum, an additional fee may be assessed against the merchant account in order to meet this required minimum. If the monthly minimum is $100 in fees, for example, and the merchant only completes enough transactions to result in $75 in fees, an additional $25 will be charged to the merchant account in order to achieve the monthly minimum of $100. Chargeback Fee A chargeback occurs when a customer disputes a charge and the merchant has to refund the amount of the transaction. This is not the same as a refunding a non-disputed transaction, such as when a customer returns a product. Having many chargebacks puts merchant services at risk because they are held responsible for the funds that are being charged back. In addition, Visa and Mastercard both require merchants to have no more than 1% of their processed dollar volumes attributed to chargebacks. If the percentage is higher, the company providing the merchant account is held responsible for the fines, which can range in cost from $5,000 to $25,000. These fines are then passed onto the merchant. In order to keep themselves protected, however, many merchant services charge anywhere from $25 to $50 in fees for chargebacks. All merchant services assess fees for providing merchant accounts to businesses. By comparing the fees various services will assess to your merchant account, however, you can better select the service provider that is best for you and your business.
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