What Are Some Typical Fees?
One of the scariest things about signing up for - and committing to at least a year's worth of services from - a merchant bank account is that there are so many fees to keep track of! There are more than fifteen different fees and surcharges that can be charged to a high risk business in exchange for credit card processing services. Some of the main ones include:
Discount Rates: This is the percentage of each transaction that the high risk merchant account provider charges in exchange for processing the card. It usually ranges from 1-3%, and rates vary depending on the type of business you have and the types of transactions you are handling - vacation rental card-present vs online/moto/phone orders. Different banks will have different rates as well, so it is important to shop around.
Debit/PIN Pad Transaction: If you have a brick and mortar agency, using a PIN (personal identification number) pad and accepting debit cards as debit rather than credit is a great way to save money. That's because the transaction fee when a PIN pad is used is significantly lower than a typical discount rate.
Application: Some high risk merchant service companies charge a flat amount just for looking at your application, running your credit report, and evaluating whether or not they are willing to do business with you at all. It is, of course, preferable to work with one that does not require such a thing.
Monthly Statement: For $10-15 per month, you will receive a bank statement listing all your transactions. You will also be provided with customer support. This is not optional and is generally a very useful service that you would not want to turn down even if you could.
Chargebacks: This fee of approximately $10-25 will only be billed to you if you ever have a chargeback or refuted transaction.
Monthly Minimums: Every high risk merchant account is set up with specific minimum transaction amounts that must be met - or paid regardless - each month. Usually, they are set around $25. This means that if you don't end up paying that amount in discount fees, you will be expected to pay it on your own, and it will be taken from your merchant account at the end of the month.
Daily Batch: Many providers charge a nominal fee when you close out your terminal at the end of the day. If you do not, for whatever reason, "batch out", you will not have to pay the fee for the day. You should make a habit of batching out daily, however, so that you can get your funds transferred as quickly as possible. Typical fees for your payment gateway are about $15 a month in gateway fees.
Cancellation: As with most cell phone plans, most high risk merchant accounts require clients to pay a sizable fee for terminating their service before their contract has expired. Before signing up for an account, you will want to make sure that the cancellation charge is a fixed amount, not a variable rate based on your previous transactions. Otherwise, you could end up owing more than a fair amount!
Overall, you will want to find out what fees to expect up front. However, because there are so many different ones, it is impossible to judge a service provider based on one specific charge or another. That's why it is important to do your research and evaluate for the best deals when all of your needs and the surcharges are considered.
