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Merchant account fees can reach 5% of everything your company sells using credit and debit cards. Credit card processors will consider many things on your account application when determining the rates. The process during which the banks determine how much risk is associated with extending you a credit card merchant account is called the underwriting process.
The major components that contribute to your credit card processing fees are the following:
Interchange, as it is known, is the biggest and most basic charge levied on every transaction you process through your merchant account. It is paid by the payment processor to the card-issuing bank and to the card network, but mostly to the issuing bank to compensate them for taking the consumer risk with the cardholder who is also your customer. The rate you, the merchant, pay for a transaction depends on many factors, including the type of the card used (credit, debit, rewards or store card), the type of transaction (in-store at a swipe or EMV-enabled terminal, by phone, or online - the latter 2 are commonly known as 'card not present' transctions), and the size and frequecy of your average transaction (larger, fewer transactions result in lower fees). Transactions in a store using an EMV chip card will cost you less in interchange fees because the shopper (and card) is physically present which generally translates to a lower incidence of fraud.
Many merchants pay a $10 monthly statement fee to cover the expense of mailing statements, but these can be eliminated entirely by opting for online-only statements for your reconciliation.
If the processor charges you for just applying, it probably makes sense to move on to the next processor. There are some processors which will charge you a moderate amount to give you help in setting up the equipment thatís necessary to accept credit cards. These vary widely but are sometimes necessary as the equipment used can be very specific to the processor and the terminals need be secured against fraud schemes like 'skimming'.
Often, a minimum amount is required by the processing company for low-volume accounts. Like a bank that charges you a minimum maintenance fee for just keeping a low-balance account open, some processors will charge you a monthly minimum fee may be of between $10 and $50.
Payment gateways transmits transaction data from your e-commerce store or cash register to the credit card companies for settlement. Unlike the Interchange fees, which are based on a percentage of the amount processed, payment gateways will often charge a flat fee per transaction, perhaps around $0.10 per order.
Because processors take some effort to get your business underwritten and set up, some will charge you a break-up fee for early cancellation of your contract. Make sure to take this into consideration as it can cost you anywhere from a few hundred dollars to thousands.
Do your homework and take the time to understand all the fees and service terms
Your account will take a week or two to get approved after you fill out and submit a brief application. Once approved, you should be able to set up the payment gateway and processor technology within a few days. The processor will usually provide support as needed.
Most payments processor will enable you to accept all major credit and debit cards. Where processors differ is with the more esoteric payment methods and newer payment technologies. You should generally look for a processing system that accepts prepaid cards, gift cards, electronic funds transfer (EFTs), and increasingly mobile and near-field communications (NFC) payments to allow you to get paid by younger customers.
Tech-savvy customers likely want to pay using digital wallets such as Apple Pay or Google Wallet. If you run an in-store terminal, these devices enable your customers to make purchases with a swipe of their smartphone or touch of their tablet.
Apple Pay, LoopPay (a Samsung phone equivalent), Android Pay and several other device-based wallets and payment methods account for 2 out of 3 three dollars processed using contactless payments. Some but not all of these payment methods work with major credit and debit cards so make sure you know your customers' payment preferences before choosing a merchant account.
Generally technical problems with your credit card terminals or questions about your monthly statements are standard in your processor's contract. Some provide 24/7 support and others will give you an account representative to help solve your unique problems. You might not talk to them often, but when you need clarification, they can be there to help.