GlobalBX

Getting a merchant account is very easy – understanding it is a different story. There can be a lot of different fees associated with a merchant account:

• Discount rate (Visa / MasterCard / Discover Card): 2:15% – 2.39%
• Transaction Fee – 20¢ – 50¢ per transaction)
• Batch Fee – Free to 30¢ per batch
• ACH Fee – Free to 25¢ per deposit
• Address Verification Service (AVS)- Free to 15¢ per transaction
• Electronic Gateway Fee – $10.00 – $100.00 a month
• Statement Fee – $0.00 – $20.00 a month
• Customer Service Fee – $0.00 – $20.00 a month
• Monthly Minimum – $0.00- $50.00 – for example, if your discount rate is 2.5% and you sell $1,000 that month, your charge is $25.00. If you monthly minimum is $25.00, you have met that requirement, and should not be responsible for that amount)
• Application Fee – $0.00 – $1,000.00
• Merchant Account Set-Up Fee – $0.00 – $1,000.00
• Electronic Payment Gateway Set-Up Fee – $0.00 – $1,000.00
• Membership or Annual Fee – $0.00 – $1,000.00
• Virtual Terminal – $0.00 – $25.00 monthly

As you can see, there can be a lot of charges. The two basic components of an Internet merchant account are a merchant account provider and an electronic payment gateway.  The electronic payment gateway is similar to the point-of-sale (POS) terminal in the grocery store.  The main U.S. gateways are Quantum Payment Gateway, Authorize.net, Payflow (owned by Paypal) and LinkPoint (aka YourPay or First Data Global Gateway).  All three of these companies cannot process credit cards without the aid of a merchant account provider.

A few things to ask a merchant account provider:  Do they provider 24 hour customer support?  What are the charges of a transaction and monthly charges?  How does a transaction get downgraded to a non-qualified rate?

Whatever they tell you on the charges – when you sign the contract, make sure that those charges are spelled out on the contract. This is what matters. Also read the print to see how long the contract is good for. They are either usually 6 months, 12 months, 24 months, or 36 months.

Do your due diligence. Let’s say you sign up with a 2.39% discount rate, 25¢ transaction fee / batch fee, 5¢ AVS (Address Verification Service), $15.00 monthly electronic gateway fee, and $10.00 customer service fee. With the above contract, let’s say you have 40 transactions at $100.00.

• The transaction fees will be $10.00
• The AVS fees will be $2.00
• The discount rate charge is going to be about $95.60
• Now let’s say that you have nightly batches each night – so for one month, that is about $8.00
• If your provider charges an ACH fee, that will be about $8.00 a month
• Your electronic payment gateway fee is probably $15.00
• Your customer service / statement fee is probably $10.00
• Now, your total is $148.60 for the $4,000 in sales, which is about 3.7%

Third party processing has some advantages over a merchant account. If your merchant account provider though does not charge as much, then your monthly fees will be less and that means more money in your pocket.  Plus with a merchant account, money is deposited into your checking account within days of the transaction automatically.  You do not need to contact the provider asking them for your money or wait five to ten days.  (This is for United States merchants.  This also does not apply to high risk business models.)