Merchant Account Pricing

Merchant account fees are an important consideration when you are determining which merchant service provider you will select for your business. If you have researched the track record of the merchant account service provider and they don’t have many Better Business Bureau complaints and they have an adequate customer service and technical service reputation, the final decision probably will be the amount which the MSP charges in order to service the merchant account each month.

There are two types of fees included in the merchant account cost which should be reviewed before making a decision. First are the one-time fees involved in actually setting up the account. Second are the ongoing monthly charges. The monthly charges in turn are broken down into a fixed and a variable component.

ONE TIME FEES

Both the merchant account and the gateway processing account may have a one-time set up fee. These fees can be called set up fee, application fee, software fee or sometimes origination fee. There can be a merchant account fee or a gateway processing fee or sometimes both. In addition, depending on the arrangements for the equipment needed, if any, there may be a contract origination fee or a down payment on the equipment with some providers. The equipment is usually rented, leased or purchased through another company from the MSP.

Depending upon the merchant service provider, you may be asked to provide a deposit which can amount to a significant amount of money. Be especially wary of a ‘non-refundable’ deposit

MONTHLY FEES

Fixed fees

Each month, there will be fixed fees for both the gateway account and the merchant service account. These may be called statement fees or monthly statement/service fees. Usually these are fairly low amounts, although the merchant service account is more likely to charge a minimum monthly fee if the variable transaction fees do not reach a certain level.

Variable fees

In addition to the fixed fees for the gateway account, some providers also charge a transaction fee. Others charge a transaction fee if the number goes over a certain level.

Typically, there is both a per-transaction fee for the merchant service account in addition to the discount fees. Variable discount fees for the merchant service provider have dozens of different permutations depending on the type of business, the type of card, how the card information is entered and how complete the information to verify the card is. The discount rates are usually grouped into either three or six tiers.

The three tiers contained in the merchant service provider account are those which are fully qualified, mid-qualified and non-qualified. The three tier system is usually used for credit cards. Three additional tiers are used when the cards are debit cards, although the breakdowns between the three are the same as with the credit cards.

A qualified card is one which is the standard card for the type of business which the merchant does. For instance, in a retail business, a fully qualified card is a transaction with a credit card swiped through the point of sale terminal.

A mid-qualified card is one which is keyed instead of swiped.

A non-qualified card is one which is keyed rather than swiped and some of the fields are left blank, such as the address code.