Every merchant account agreement has its own policy on the implementation of fees associated with processing payments. The convenience of easily accepting credit card payments over the internet brings an incredible amount of freedom and opportunities to business operations, but with that convenience comes some cost which takes the form of credit card processing fees.
In order to take payments online, four different things must be in place, and each may come with their own host of fees and charges. These necessities include a merchant account, a shopping cart system, some type of web hosting service, and a payment gateway, and they can each tack on their own fees and pieces of the pie if you are not careful. With the competitive nature of merchant accounts in the US, many merchant account providers also provide some of these other services in packages or eCommerce bundles. I will describe the different types of fees that may be associated with setting up your merchant account and credit card processing. Be sure to ask about each of these fees to be certain you are aware of everything that will be charged to your account.
Some merchant account providers will first charge an application fee or processing fee to cover their expenses for looking over your credit history, business history and background. Many merchant service providers wave this fee to gather more business. This is not necessarily the best scenario, as some providers that do charge a fee, charge it because their time is valuable and thus cannot be wasted. This only adds credibility to that provider. After the application fee, there is usually some type of membership fee which is most commonly charged on an annual basis. Membership fees are most common when purchasing merchant account services for specific industries or through trade organizations. Then the Set-Up fee usually comes next. This is some type of flat fee for the activation and setup of your account and may also include gaining access to an online payment gateway. This gateway access will be the portal you use to actually make the credit card transactions online. If you are purchasing these services individually, there will certainly be some type of access fee for using the secure server for approving and processing credit card transactions through a payment gateway. As I said before, some merchant services may include this payment gateway way in their initial set-up fee.
Once the account is in place then come the monthly fees. Monthly service fees are usually in place to make sure a merchant service provider covers their maintenance expenses when the income for that account is below a certain amount. This may look like a base amount a business must pay for merchant services when there are little or no sales. Merchant account providers make the bulk of their income by collecting a percentage of every transaction. Credit card companies take their cut of that percentage, and the rest is income for the service provider. That is why other fees must be charged to cover accounts that have little or no income. It is difficult to cover their costs when they are not gaining enough in transaction percentages.
The last most common fees that many businesses will encounter with merchant services are chargeback/reversal fees. Any time a credit card payment is charged back by a consumer, the merchant service provider will usually have a predetermined fee for correcting the situation. These are very similar to overdraft fees or bounced check fees for a regular bank account.
It is important to ask about each of these types of fees that might be associated with setting up an internet merchant account for your business. As I said before, you will encounter many providers that combine or eliminate fees to increase their business and add value, but it is important to verify what that provider’s policies are regarding each type of fee so that there are no surprises.

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