An Overview of Fees Involved With Merchant Processing

An Overview of Fees Involved With Merchant Processing

Accepting credit cards is an essential part of running a modern business. However, many people who open merchant accounts are shocked at the number of fees and costs involved. Here is an overview of the different fees you will likely run into when paying for credit card processing for your business.

Discount Rate

This is usually the largest cost associated with a merchant account. It will vary widely, according to the type of transaction and type of credit card, but it is always a percentage of the transaction. This fee includes the interchange fee that is given to banks that issue the card.

Transaction Fee

This fee is applied to every transaction, including ones that are declined by the bank, invalid card numbers, and every single transaction regardless of the result. This fee also varies according to the type of transaction, such as whether it is swiped or keyed in.

PIN Debit Transaction Fee

This fixed fee is charged when you charge a debit card in a transaction that requires entering a PIN, or personal identification number.

AVS (Address Verification Service) Transaction Fee

When you process a payment using a MasterCard® or Visa®, their address and zip code is verified to ensure that it matches the address on file for the cardholder. This is an essential safeguard against identity theft and credit card fraud, but it unfortunately requires charging merchant accounts an AVS fee.

Daily Batch Fee or ACH

When you settle your daily transactions with the credit card processor, this fee is charged. If you have no batch, or daily transactions, to settle, then it will not be charged.

Support/Service/Monthly Statement/Etc. Fee

This is a fixed monthly fee that will be charged by credit card processors to cover the cost of creating your statement as well as support and service should you need them.

Internet Gateway Fee

This fixed fee is only charged to merchants who use an internet gateway for credit card processing. There may be an additional fee that is charged per transaction.

Monthly Minimum Fee

If your monthly fees don’t add up to an agreed-upon amount, many merchant account providers will tack on this fee to bring it up to a minimum monthly cost.

These fees add up to a small percentage of each sale. Credit card processing is definitely not free, but it is essential to running a business in modern times.

Do I Need a Terminal or a Mobile Swiper?

Choosing between a terminal or mobile swiper can be difficult because some businesses might benefit from both, and there are certain benefits to each that make them completely unique offerings. While they both offer credit card processing, the additional tools and capabilities are very different. Here are the major things that you should consider when choosing between the two.

Credit Card Terminal

Most businesses can’t survive without a terminal because nearly everyone pays with credit or debit cards. There are wireless terminals that are small enough to carry around, but they aren’t nearly as portable as mobile swipers. While some people might consider terminals clunky and going out of style, they offer benefits that you won’t find with the mobile variant.

The major benefits include additional security, tools and capabilities. For example, terminals allow you to print paper receipts and add advanced security like tokenization and chip readers. These terminals also allow software integration so that you can upload your payments into bookkeeping software. This makes it easier for to manage merchant accounts because you won’t have to manually tally your payments or add them into applicable programs.

Terminals also allow you to use gift cards and are considered more durable because they can handle thousands of transactions without wear.

Mobile Swipers

Mobile swipers don’t offer as many tools as full terminals, but their one major benefit makes them a boon to merchants. You can connect the swiper to any mobile device and take payments anywhere. It doesn’t matter if you’re at a swap meet, office or even on the street. This allows you to perform credit card processing wherever you do business. Many people with merchant accounts get swipers to help them collect payments when they’re not at their regular business location.

Swipers are also much easier to use because you just connect the piece to your mobile device and everything’s ready to go. You don’t need to connect a phone line, power cord and then make sure all the software is integrated. Pricing also tends to be a bit better, and the device itself is either free or very inexpensive.


Choosing between a terminal or swiper can be difficult if you move around a lot. Terminals are often considered the stationary option, but wireless terminals allow you to move around and experience all the security and additional benefits of a regular terminal. At the same time, swipers are easy to carry, require little work and are simple to use.

Accepting Credit Cards at Tradeshows

If you are currently working the trade show scene, you likely know that there are opportunities for sales, but people these days are not carrying cash like they used to. What is the solution? Credit cards, of course. Can you accept credit cards at tradeshows? Yes, you can! There are two main ways that you can accept credit cards when on the go, including at tradeshows:

Wireless Terminals 

One of the options you have when you wish to accept credit cards at a tradeshow is to use a wireless terminal. This type of credit card processing can be done either through a Wi-Fi connection or through a cell phone connection and is very similar to using a terminal in a retail location. The buyer’s credit card is swiped through the terminal, and the information is sent through to the processor. From there, the information about the transaction is sent through to the issuing bank, and the bank will check to ensure the buyer has money in their account to cover the transaction. At that point, the information is sent back through the channels with either an approval or denial and the message is displayed on the terminal. If the transaction is approved, the buyer will take their purchase and the money will be deposited into your merchant account within hours or a couple days.

Mobile Credit Card Processing

Your other option is to consider mobile credit card processing. This is becoming extremely popular thanks to the fact that it can be done right from a smart phone through a downloadable app. The process will begin with either swiping the card through a small scanner that can be put into the phone or by typing the credit card information into the phone, directly. Once the information is in the app, the process is almost identical to the process listed above for the wireless terminal. In the end, the approval or denial will be displayed on your mobile phone screen, and the purchase amount will be deposited into the merchant account.

As you can see, accepting credit cards at a tradeshow is definitely an option. It is very safe, very quick and very convenient. Your customers will appreciate the ability to use their credit card and your company will be in a better position to make the big sales.

Referring Merchants to Credit Card Processing Companies

Merchant accounts are a necessity for businesses of all sizes. More than 80 percent of consumers use credit cards or debit cards to make most of their purchases. Therefore, every business could increase its profits by using credit card processing machines and accounts. Merchant accounts are special accounts that allow a business to accept endless credit card transactions. A business owner can obtain one of these accounts by completing an application with a reputable company. The business will be capable of accepting credit card payments shortly after the account becomes active.

Credit card processing companies help a business to run smoothly. These companies provide bank accounts into which the merchants can receive credit card funds. The processing company usually charges at set fee per transaction for the merchant. That fee is somewhere between 2 to 4 of each total transaction. New businesses will have higher charges because of a limited credit or business history.

The charge varies with each processing company, which is why it is imperative that a business owner conduct thorough research before signing up for any merchant account. The person must be extremely careful by reading all the fine print in the agreement. Some card processing companies charge fees that are much higher than the ones that other companies charge are. One company may charge “additional transaction fees,” which can add up fast for a busy business. Additionally, the processing company may charge fees for chargebacks and such occurrences.

A merchant account may have a monthly maintenance fee if the business does not conduct a large volume of credit card sales. In such a situation, a merchant account may cost the business owner an additional $10 to$25 per month.

Referring Merchants to Credit Card Processing Companies for a Fee

A business owner who has an established merchant account may be eligible to earn additional money by referring other merchants to the same processing company. Processing companies that issue these referral bonuses usually state such on their front page. The terms of different processing companies may vary. Some of them state that they will give a $100 bonus shortly after the new customer creates a merchant account. Other companies ask the merchants to wait a certain amount of time before they receive their referral bonuses. Some companies may have a limit on the amount of referrals one client can perform. Information on referral bonuses is available through the processing company.



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