·        Discount Rate.  This is reasonably straightforward to understand, yet can make all the difference if you get it wrong.  This is the  merchant account fee that is charged whenever a transaction is made.  On-site transactions that entail swiping cards are cheaper than  online sales, or inputting the numbers manually.  On average, 2.5% is the normal discount rate for online transactions.

·        Transaction Fees.  Just as the term suggests, this is also the cost incurred whenever a transaction takes place.  It typically goes hand in hand with the discount rate.  For example, a company that charges 2.5% + 30 cents per transaction is indicating that the discount rate is 2.5% and the transaction fee is 30 cents.  What’s different here is that the transaction fee charge is made regardless of whether or not the actual transaction is approved.  On average, this equates to between 20-30 cents dependent in the type of sale.

·        PIN Debit Transaction Fees.  Purely for debit cards, this type of merchant account fee is when a PIN number has to be entered manually.  This fee is generally a flat fee (no accompanying discount percentage), applicable for retail accounts and is usually around 70 cents.

·        Address Verification Service Transaction Fee (AVS). If you’re not swiping the card itself, then you will need an AVS system.  This is basically a security system to prevent fraud, and all Internet authorizations require an Address Verification Service request.  AVS checks the customer’s billing address with the address listed on the credit card.  It costs around 5-10 cents per transaction.

·        ACH or Daily Discount Fee or Batch Fee.  The cost to transfer the day’s takings into your bank account, normally between 5-50 cents (although no charge is made if there are no transactions).

·        Monthly Statement/Support/Service fee. Generally taking into account all that they provide for you, this merchant account fee is a fixed amount.  Ranging from $10 per month to $15, it gives you a toll-free support number as well as full back-up support and help.

·        Internet Gateway Fee.  If you don’t use an Internet payment gateway, this charge won’t apply.  Otherwise, you’ll need to pay this fee as well, which is a monthly charge for using the gateway’s services. The monthly fee for this can be as much as $30, and doesn’t include any other charges that your merchant account may charge per transaction.  Moreover, you will  probably be assessed a separate gateway transaction fee, generally from 5 cents to 20 cents per transaction.

·        Voice Authorization Fee.  Only applicable if you’re using a phone to complete your transaction, this costs between 75 cents and $1.50.  Although expensive, it’s not a merchant account fee that you would often be responsible for, as it would probably only come into effect if your normal method was inoperable for any reason.

·        Monthly Minimum Fee.  This is the amount that you need to pay towards your merchant account expenses should your transaction volume be under a certain amount, determined by the merchant account provider.  As long as you meet the minimum fee required by the credit card processing company, you may not even know about the minimum monthly fee in the first place.  The only time you have to pay anything is if you don’t meet the minimum amount, and you make up the difference required (so if you have a minimum amount if $25 to meet, and your fees only come to $22, you’ll have to pay an additional $3).  Consider this scenario, presented for instruction purpose, to calculate the monthly minimum.  Suppose, for example, that you process $800 for the month, your discount rate is 2.5%, and the monthly minimum is $25, your total processing amount is:

$800 x .0250 (2.5%) = $20

In this scenario, your monthly minimum is:

$25 - $20 = $5

You will have to pay $5 more for this month because you did not meet the monthly minimum.

·        Surcharge Fee/Partially-Qualified Fees/Non-Qualified Fees. Ranging from between 0.5% and 2.5%, these fees are applicable when certain credit cards are used by your customers. These are normally assessed for company credit cards, government cards and rewards cards, and those used internationally.

·        Application/Set Up Fee. Exactly as it says, this merchant account fee is charged to you when your account is initially set up. Many providers skip this fee, however, so look around.

·        Reprogramming Fee. If you need to update a particular part of your transaction set up, then this fee is charged to cover the cost of reprogramming your software and hardware.

·        Chargeback/Retrieval Fee. This only comes into effect if there is a dispute on a sale or transaction.  Whether the customer doesn’t recognize the sale, or the card has been used fraudulently, a dispute will arise and your merchant account provider will then resolve it, by either giving the customer their money back, or showing them proof of the transaction.  The cost of this fee is around $25.

·        Annual Fee. Simple and straightforward, this is the annual cost for running your account.

·        Cancellation/Termination Fee.  Since it can be quite costly to set up a merchant account – credit checks, administration costs, maintenance of the server, etc – most will have a cancellation or termination fee in place.  This is simply what you pay should you stop, or close, your merchant account with a particular provider.  Dependent on what provider you use, this may be in the way of how long you have left on your minimum account period, and what your average fee is on a monthly basis.  Obviously, this can be quite costly, so try and find a provider that has a fixed cancellation fee, or preferably, no cancellation fee.

·        Hidden/Junk Fees. These are the merchant account fees that catch the majority of people by surprise, so it’s well worth knowing what to look out for, and avoid, if possible.  For example, you might be offered an excellent introductory rate, only to see it double a few months after you join a particular merchant account provider’s service.  (A merchant account provider that offers no termination fee will probably not engage in such a deceptive business practice.  Please note that even a cancellation fee may be “secretly” assessed.)  Other companies are only offering good rates on certain cards, and extortionate fees on other cards.  Batch fees, AVS fees, and gateway transaction fees (and even an Internet gateway monthly fee) may not be disclosed.

There are many ways that you can fail in the world of online business and internet marketing, but failing because of your merchant account shouldn’t be one of them.  As long as you’re aware of the different merchant account fees that can apply to you, you should be able to grow your business accordingly, and reap the benefits that come with it.

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