Merchant Account Rates & Fees: Reference Guide
by iMerchantNetwork.com

Qualified Discount Rate (or just "Discount Rate"): This is the percentage that will be charged on all of your credit card sales.

"Swiped" credit cards have a lower discount rate because the cardholder is present at the point of sale and the risk is therefore lower.

"Keyed" credit cards have a higher discount rate because there is more risk involved in accepting the credit card. Why? The cardholder is not present at the point of sale and someone else could be using the credit car.

Mid & Non-Qualified Surcharge : These surcharges are essential to understand because some of your Visa and Mastercard transactions will have this added to the qualified discount rate (above).

Mid-Qualified Surcharge applies to swiped merchants only (meaning the card is present). When a credit card is swiped and the magnetic strip cannot be read in the terminal, you have to key in the transaction. When you have a telephone order, mail order or Internet order, you also key in the transaction.

A surcharge will be applied to this transaction. In other words, if your qualified rate is 1.59% and your Mid-Qualified surcharge is .80%, you will pay 1.59% + .80% = 2.39% for that transaction.

Non-Qualified Surcharge applies to both swiped and keyed merchants. Whenever a corporate or foreign card is used, or you do not utilize the Address Verification System when keying in a credit card, the Non-Qualified Surcharge will apply. In other words, if your qualified rate is 2.39% and your Non Qualified surcharge is 1.95%, you will pay 2.39% + 1.95% = 4.34% for that transaction.

Transaction Fees : Merchant providers charge a per transaction fee on each sale. Providers may also include a per item fee in addition to the transaction fee. Make sure you understand the true cost of the transaction fee structure.

(Note: with a internet/MOTO merchant account, your gateway provider will also generally charge a per transaction fee in addition to the other transaction fees listed above).

Address Verification System (AVS) : Address Verification applies to your keyed in transactions. AVS determines whether the cardholder's street address and zip code actually match the billing address on file with their credit card company. AVS does not work for some foreign transactions.

An AVS fee is a separate fee charged for each transaction.

Travel & Entertainment Cards : American Express, Discover, Diners and JCB are considered non-bank cards. Yes, it's true. The transaction fee for these cards is normally called a "T&E fee," or a non-bankcard transaction fee.

You will incur this transaction fee each time one of these cards is processed, in addition to the discount rate set by these individual companies.

Batch Header Fee : At the end of each day your merchant account will automatically be set up to close out for deposit (what's called a settlement). Once this is completed, your customers funds will be deposited in your checking account. A batch header fee is applied for each day's settled batch.

Gateway Access Fee : Do you process your transactions via internet processing or a virtual terminal? If you do, every transaction that is completed by your customer utilizes your internet gateway for processing. A monthly fee and per transaction fee is associated with this. The monthly fee ranges from $20.00 - $50.00 and the per transaction fee can range from $0.10 - $0.35 cents depending on your merchant provider.

Wireless Access Fee : Do you use a wireless terminal? Wireless terminals will allow you to process transactions through a wireless network, rather than processing transactions through a telephone landline. A monthly fee is associated with this. This fee ranges from $12.00 - $25.00 depending on your merchant provider.

(Note: You can expect a set-up fee for the wireless network with will range in cost from $35.00 - $50.00.)

Monthly Minimum : Most merchant providers insist on a monthly minimum (typcially $25) associated with your Visa and Mastercard merchant account. In other words, they want to make sure you tally up $25 per month in discount rates and transaction fees. If you don't, they chrage you the difference.

Statement Fee : This is a monthly fee for preparing your statement and reports then mailing it to you. This fee is generally $5 - $10 per month.

Annual Fee : Some merchant providers charge you an annual fee for your merchant account. These annual fees range from $50 - $195.00. Make sure you ask in advance about this fee.

Termination / Cancellation Fee : Most merchant providers have a stern policy regarding termination / cancellation fees. This fees ranges from $75 all the way up to $400+. Additionally, there is a specified time period in your application/contract that you must remain with this merchant provider – usually 3 year terms. It is important you understand this because a huge cancellation penalty can be very costly.

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