Merchant services or rather services that allow a retailer or a business owner to honor credit cards can provide insurmountable benefits and conveniences. But expectedly, these benefits come with a price. Those with a merchant account are expected to pay fees as a form of compensation for the service. These fees are among the reasons why merchant account services are hard to comprehend. One reason why these fees may seem complicated is because of its number – there are just too many of them.
However, there are only a few basic fees that business owners need to worry about in merchant services. The most basic of them all is the discount rate, also known as the interchange fee. The discount rate is basically the percentage charged by the service provider for every credit card transaction on the store. For instance, if the discount rate is two percent, a purchase worth 200 dollars will be charged with a four dollar interchange fee.
All merchant services also charge a transaction fee. Like the discount rate, this is charge per credit card used on the store. However, instead of a percentage, the fee here is predetermined for every transaction. This fee can range from 20 to 30 cents. Retail merchant accounts have lower discount rates and transaction fees. Meanwhile, cards that are keyed in have higher fees for both.
Besides these two basic fees, merchant services charge certain fees, depending on services rendered by the account. For instance, stores that honor debit cards are charged with a transaction fees primarily for PIN debit transactions. Another similar service is the address verification service. This works for merchant account holders that honor non-swipe transactions, allowing them to look up the address of the cardholder for valuable verification purposes.
Lastly, there are the recurring fees such as the monthly fees for the merchant services. This works as the payment for the merchant account itself, discounting the fees for all the credit card processing transactions. These fees may seem like a lot, but the transactional ones are hardly worth more than a dollar. And for the benefit of credit card processing, these fees are minor compared to the convenience it can provide.