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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.


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