Understanding Your Electronic Payment Processing

Whether you are a web-store or a ‘brick and mortar’ merchant, you are going to need to be able to accept electronic payments for your goods and services. Credit card processing fees can be confusing and misleading. The following is a breakdown of payment processing fees associated with merchant accounts. Every electronic payment provider is different and may break out the fees differently on the monthly statement. You may see all or only some of these fees on your statement, but either way, you are paying them.

Before I break out the different costs, if you are looking to begin accepting credit cards, or if you already do accept electronic payment but are window shopping for a better plan, here are a few things to consider first:

Flexibility – Every business is different. Your business may provide high volume, low-cost products, or you may provide long-term, high quality services to customers. Whatever the case, It’s best to go with a provider that can give you flexibility and different options tailored to your specific needs.
Rate Break-out – The most important aspect I feel. Below, I will define all the different rates, but the more options associated, the better.
Service – When looking for a reputable service, I prefer real customer service. Whether online or a ‘brick and mortar’ retailer, it is important to have the human factor. Having an assigned account representative, close to you is invaluable. I also look for solid online customer service to include, online chat, email, forums, etc.
Financial Institution – An electronic payment processing merchant account serviced by a large and reputable bank is important. For example, choose a provider affiliated with Wells Fargo before going with one that services accounts for Bank-o-Save-alot.
Maintenance Fees

Application Fee – The first fee you will pay when setting up a merchant account for electronic payment processing. This fee can range from $0 to $300.00. This is a one-time fee associated with running a credit report check on new applicants, and setting up the account. Often, account executives will be flexible on the application fee depending on your business.

Statement Fee – This is a monthly fee associated with providing you this hard-to-understand statement that outlines all your costs associated with electronic payment processing. Statement fees usually range from $5 to $20 a month.

Monthly Fee – A flat rate fee associated with maintaining your payment processing account. This fee is uncommon. More common is a monthly minimum fee.

Monthly Minimum Fee – A fee assessed if your electronic payment processing rate fees do not reach a minimum dollar amount for each month. For example, your monthly minimum is $30.00, but your sales for the month only result in a total of $20.00. You will be assessed an additional $10.00 to reach your monthly minimum. Ranges vary, but are often between $20-$50 a month. With a good payment processing account, these fees may be flexible as well.

Yearly Fees – Like a credit card with a good APR, payment processing servicers may assess an annual fee associated with maintaining the account.

Per Transaction Fees – This is a dollar amount fee assessed for each transaction made. This is different from and IN ADDITION to, the Discount Rate percent outlined below. Rates vary between providers and depending on the type of electronic payment made. Typical transaction fees range from $.20 to $.50 per transaction. Typically, this rate will be lower for qualified credit card transactions, and higher for non-qualified or MOTO transactions (Explained more below)

Early Termination Fee – Just like with a wireless phone provider, a merchant may be assessed a fee for early contract termination. Some fees are fixed or pro-rated. If planning to switch providers, it is a good idea to let a professional e-commerce consultant review your contract to see if it is cost-effective to switch providers now or later

Summary: No matter what your business, it is in your best interest to find an electronic payment processing plan that is customized to meet your needs.

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