MERCHANT RATES: KNOW ITS COMPOSITION

2007-03-08 10:33:40

( Business )



The emergence of credit cards catapulted the indispensable role of merchant providers in processing credit card transactions. It has become an indispensable tool in merchant credit card account set up. What composed the costs included in merchant rates? You must explore these costs before applying for a merchant account.

Fixed Costs

Merchant rates generally include annual fee, statement fee, transaction fee and batch fee. Annual fee is charged for the use of credit card processing equipment issued by merchant providers. Statement fee is a monthly cost for the maintenance of merchant accounts. Transaction fee is the uniform fee charged for every transaction regardless of the amount. Batch fee is usually paid per day for every batch of transaction that you send each day to the merchant provider for processing.

Variable Costs

Merchant providers usually charge application fee to cover the cost of processing merchant account applications. Discount rate, termination fee and charge back fee are the other variable costs included in merchant rates.

Discount rate is the percentage of the commission deducted by merchant providers from the total sales of the merchant. The amount varies according to the volume of sales. Charge back fee is charged when customers request a refund on its credit card transactions. Termination fee is charged when the merchant cancels the account with the merchant provider before the term of the service agreement ends. Merchant service provide agreement usually run for a period of one year but some merchant providers require a three year service agreement.

Brokers who facilitate to set up your merchant account with service providers might add up to the costs involved in merchant rates above. Beware of hidden fees and conditions that can escalate merchant rates particularly with those offering easy access to electronic commerce.

Choose merchant providers that have viable experience in the type of business you are operating. It will be easier to work out arrangements with them. Also, choose providers that have the track record of financial stability and assure efficient handling of your finances.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.