Credit card processing companies all charge a few types of common fees to their merchants. These fees can be significant, especially for smaller businesses, so it’s important to understand a few of the most common fees before signing up for a merchant account. While the exact type and number of fees vary, here’s a look at a few of the standard fees that are typically associated with merchant accounts.
Some of the most common fees are gateway fees, which are assessed on a monthly basis as a separate cost from per-transaction fees. Gateway fees are an important cost to consider, but they generally aren’t very high. Most credit card processing services charge $20 or less per month. Businesses sometimes assume that low gateway fees mean a better overall value, but it’s important to remember that per-transaction fees and other costs can quickly eliminate any gateway fee savings. Maintenance costs also occur regularly, although they’re usually explained clearly in processing companies’ contracts. Maintenance fees pay for necessary upgrades to credit card processing companies’ equipment, so they’re usually non-negotiable. Credit card processing companies may also charge for upgrades to equipment, and in some cases, these upgrades may be mandatory, particularly if a terminal needs to be updated to meet new security protocols.
The biggest fee associated with credit card processing is the per-transaction fee assessed for each sale and credit. Per-transaction fees are probably the most important cost to consider. However, reputable credit card processing companies don’t charge blanket rates for all of their merchant accounts. Instead, they decide on per-transaction rates based on the number and size of the transactions that a business is expected to handle on a regular basis. This means that larger businesses will typically see lower rates, although smaller businesses can still find affordable per-transaction fees that won’t eat into profits. Businesses should be careful to accurately assess their potential monthly sales when signing up for merchant accounts, as there may be penalties if an expected rate of transactions cannot be met.
Knowing the common fees associated with credit card processing is a big part of planning for business growth. Reading a contract is the best way to get a sense of what each credit card processing company is offering, but businesses should also consider the value of additional services provided by credit card processing companies, including Internet shopping carts and other added functionality that can improve sales. Choosing a credit card processing service can be difficult, but companies that provide a transparent assessment of the various costs associated with their services make the process much easier.