Merchant Services



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If you want to accept credit and debit cards for your business, a merchant account through a merchant account service is a necessity. The account is provided by a bank and serves as a contract between a merchant and the issuing bank. When you obtain an account and enter into an agreement with a merchant account service, you are required to obey all operating regulations established by the bank and credit card companies. This includes the various fees associated with the account.

Merchant services have a variety of fees, some intermittent and others charged on a percentage or per-item basis. The issuing bank sets some of the fees while others are predetermined by the credit card companies and passed through the merchant account service. Understanding the fees and how they work is crucial, as you will be obligated to pay them once you are approved for an account.

Address Verification Fee – Address verification is a fraud prevention tool that automatically verifies a cardholder’s address with the address the credit card has on file. Some merchant account providers charge a small fee, typically $0.05 to $0.10 per transaction you use address verification on.

Cancellation Fee – A cancellation fee is an early termination fee enforced when a merchant ends their contract with a merchant account before the term of the contract ends. Not all merchant account providers require contracts, but those that do will have a cancellation fee.

Chargeback Fee – A chargeback is the return of money to a consumer, forcibly initiated by the consumer’s bank. Chargebacks are often the result of fraudulent transactions and can result in thousands of potential losses for a merchant. A chargeback fee refers to the amount a merchant account provider charges for processing chargebacks.

Gateway Fee – The gateway fee is a monthly fee charged by payment gateway services passed on through a merchant account service. While some payment gateways do not charge a gateway fee, others charge as much as $15 per month.

Monthly Minimum – This refers to the minimum dollar amount you must process in transactions in order to keep your merchant account. The fee covers the provider’s costsassociated with maintaining the account. If you do not meet or exceed your monthly minimum, the merchant account provider will charge you the difference in cost to satisfy the monthly minimum.

Statement Fee – A statement fee is an industry standard fee charged by all merchant account providers. The statement fee is associated with your monthly statement and charged at the end of your billing cycle. Most merchant account providers charge between $7.95 and $10. A statement fee is charged whether you receive a paper or paperless statement.

Transaction Fee – As its name implies, a transaction fee is a flat fee charged for every transaction you process. The fee is typically between 20 and 25 cents and is the same regardless of how much the total transaction is.

Whether you are a store owner or an online merchant, a merchant account will allow you to accept and process credit card payments. Understanding the costs you will incur with such an account will ensure your business will be profitable.