Merchant Account Services

Anatomy of Merchant Service Fees
By Natalie Aranda




A credit card Merchant Service is almost a requirement of doing business in today’s marketplace. It does not really matter what your personal feelings are toward the use of credit cards or credit in general. The consumers like credit cards and often will not do business with an establishment that does not accept them. In a highly competitive business environment you can not afford to lose this business. The Merchant Service is the institutions that enable you to accept and process credit card transactions.

There are a number of Merchant Service fees that must be paid by the business owner. These fees vary greatly between Merchant Service providers and they must be carefully understood and compared when selecting the one for your business. The fees include a straight transaction fee that is charged each time the credit card is used. This fee is usually small, but can add up with frequent small transactions. The Authorization fee is the most troublesome and unfair one in the view of most business owners. It charges a fee every time a transaction is processed regardless if the charge is accepted or rejected.

Most Merchant Services have a minimum monthly fee as well. If your business volume does not exceed this figure, you will be charged the difference. The Merchant Service provider also charges for their monthly statement. They will often impose a hefty termination fee should you close your account before the agreed time span has elapsed. The business owner is responsible for any “free” equipment give to him for processing credit cards and will have to cover the cost of any loss or damage to them.

The largest and most important fee is the discount rate. This is basically the cut taken by the Merchant Service provider of every transaction. Since the discount rate is a percentage of the total sale, this fee will rise and fall along with your sales figures. The discount fee is the most important starting point for evaluating a Merchant Service provider. The good news is that this field has become highly competitive also. The financial institutions vie for your business and a reduced rate is their best bargaining chip. Even Offshore Merchant Accounts are beginning to show more competitive fervor in their discount rates as the marketplace becomes more and more global in nature. It is vital to understand the complete fee structure when considering your Merchant Service provider. You have to sacrifice some of your profit in order to benefit from the ability to accept credit cards, but how much of a sacrifice you must make can be controlled by careful shopping and knowledge of fees.

Natalie Aranda writes about technology, ecommerce and finance. A credit card Merchant Service is almost a requirement of doing business in today’s marketplace. It does not really matter what your personal feelings are toward the use of credit cards or credit in general. The consumers like credit cards and often will not do business with an establishment that does not accept them. In a highly competitive business environment you can not afford to lose this business. The Merchant Service is the institutions that enable you to accept and process credit card transactions.

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