Understanding Merchant Account Fees
Merchant Account Fees-What you need to know!
As a merchant account provider, we are always looking for the best pricing solution for each of our customers. The pricing structure and Merchant Account Fees for all merchant accounts can vary wildly from person to person, and business to business. Here at SecureGlobalPay, we work hard to make sure that you are placed under the proper pricing structure that will best suit your needs.
In order to understand our process, we have put together an easy-to-use guide to help you understand how the Merchant Account Costs and pricing structure for merchant accounts typically work. Furthermore, we’ve made a list of common fees that you might recognize on your monthly statement. We are always happy to chat with you over the phone in regards to fees you may be concerned about. Please give us a call today!
When it comes to merchant account pricing and Merchant Account Costs you may frequently hear two standard “terms” being tossed around. Most merchant service providers offer tiered pricing or interchange pricing.
Tiered Pricing
Tiered pricing is a great option because it can allow for flexibility and also provide low percentage rates and transaction fees. When signing up for tiered pricing, your merchant account provider will gather as much information as needed to offer you the best discounts within the tiers. However, to get the best discounts, you need to follow strict guidelines for processing. Each transaction is graded and if it doesn’t meet the requirements for the lowest discount, then you will be downgraded to the next pricing tier. The transactions will most likely fall into these categories.
Qualified Discount Rate
Mid-Qualified Discount Rate
Non-Qualified Discount Rate
Downgrades
This is a simplified version of the possible tiered discount rates. Each transaction will be charged a percentage fee and a per transaction cost. A transaction fee is usually a set price that you are charged to process each transaction. This fee is taken out whether the credit card is approved or declined by the card-issuing bank.
There are many reasons for a downgrade fees. Some are within your control while others are not. For example, the type of credit card used by the customer can determine the rate at which the credit card transaction will be processed. This can be frustrating as business owners don’t usually get to choose what kind of card their customers use to pay the bill.
However, that doesn’t mean that you are stuck paying impossibly high Merchant Account Fees. We teach our business owners to be proactive in understanding what kind of situations can affect their fees. By becoming aware of these fees and making small changes to the way you processes transactions, you can continue to process at the lowest qualified discount rate.
Interchange Pricing
Many small businesses are not offered the option of using the interchange pricing model as it is generally available for businesses that do high dollar volume per month. However, we see more and more customers who find that interchange pricing works for them. Many business like knowing that no matter what type of transaction they are processing the percentage fee and per transaction fee will stay the same.
While the tiered plus pricing model and the interchange pricing model are the two main pricing structures used by your merchant account provider, you still need to be aware of the variety of other fees that can show up each month on your statement. Many of these costs can be avoided if you call us as soon as you are aware that you are being charged.
PIN Debit Transaction Fees
This service usually consists of a small fixed cost per month with a Merchant Account Fee assessed per transaction. This transaction fee is only applied when you process a debit card through the proper network. This helps avoid paying costly interchange and downgrade fees. A debit card is different from a credit card in that you are usually required to enter a personal identification number to give approval of the charge.
Address Verification Service Transaction Fee (AVS)
When you process a card that is not physically in front of you (i.e. buying something online), Visa and Mastercard use the card holders address as part of the verification process. This is run through a service known as Address Verification Service (AVS). If you do not verify the address through AVS then you will be charged a downgrade fee in your pricing structure. It is to your benefit, as the business owner, to use the Address Verification Service as it will help to prevent fraudulent charges as well as possible charge-backs fees.
Daily Batch Fee
At the end of each day you should be taking the time to make sure your transactions are all settled with your merchant account provider. This is usually done in bulk at the end of the day. We recommend to all of our customers to make sure their batch is processed automatically each night. If you end up skipping a few days and process a couple days’ worth of transactions, then you will be charged the downgrade fee.
Monthly Statement Fee
This monthly charge is usually charged by your merchant account provider to help cover the cost of maintaining your merchant account. This cost typically stays consistent from month to month and is applied toward billing and customer support.
Internet Gateway Fee
If you are processing payments online, you might come across the internet gateway fee. This fee is given to your gateway provider (typically authorize.net, NMI, Innovio or similar) to help secure, authorize, settle and maintain your merchant account.
Monthly Minimum Fee
In our previous posting, we emphasized the importance of letting your merchant service provider know exactly how much you will be processing each month. This is because each month that you don’t process anything you will still be charged a monthly minimum fee to cover the cost of the merchant account.
PCI non-Compliance Fee
There are 12 PCI compliant standards that must be met when processing credit cards. If these standards are not met, then you will be charged expensive monthly fees until you are in compliance. To maintain compliance, you will be asked annually to complete a “Self-Assessment Questionnaire (SAQ) and/or Quarterly Network Scan. Make sure to go over each of these forms with your merchant account provider. We’ve seen many merchant account owners continue to pay fees because of a tiny mistake on their questionnaire.
Application/Setup Fee
While this fee is rare, there are some merchant service providers that still charge a fee when you fill out an application for merchant services.
Chargeback/Retrieval Fee
When a customer disputes a transaction or returns a product, then the bank will issue a chargeback fee. These fees do add up, which is why it is critical that you try everything possible to make sure that your customers are happy with your service.
If you come across any other unfamiliar charges or costs, then please call SecureGlobalPay today. We are happy to go through your statement line by line to ensure that you understand each fee on your statement and your overall pricing structure.
Sources: – See more at: cardfellow.com/K5XAZH5F.dpuf
