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Merchant Account Rates & Fees
When selecting a merchant account provider, it is important to compare all of the rates and fees that are involved.
You will typically have to pay the following fees when opening a merchant account:
Interchange Fees These fees come from the international processing system that is owned by Visa & Mastercard. They are exactly the same for all merchant service providers.
- Discount Rate A fixed percentage that is taken from each sale.
- Transaction Fee - A flat fee charged for each transaction
Payment Processor Fees A fee that is added to the transaction fee to cover the cost of the credit card payment processor.
Gateway Provider Fees If using an internet gateway provider, a fee will be added to the transaction fee to cover the costs of their services.
Equipment and Installation - Software can range from $0 to $1200 US or more depending on whether you have batch or real-time processing. Costs for hardware (POS terminals) can range from $500 to $1,500+ depending on the model you purchase.
Merchant Service Provider Fees Each provider will add their on fees and markup the discount rate and transaction fee.
- Discount Rate The merchant service provider will markup the interchange discount rate.
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Transaction Fee The merchant service provider will markup the interchange transaction fee. The payment processor and gateway provider fees will also be added to the transaction fee.
- Application Fee - The initial fee you are charged to open the merchant account. Many merchant account providers do not charge application fees.
- Monthly Fee A monthly fee that includes a statement fee and could vary depending on whether you meet your minimum monthly transactions.
- Annual Fee Some merchant service providers will also charge annual fees. These fees usually arent disclosed upfront.
- Chargeback Fee This is a fee that is charged when the cardholder disputes a charge that is found.
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