Instant Credit Card Merchant account can be setup in minutes to accept credit card payments. Following are the various fees and costs in setting up an instant credit card merchant account:
- Application / Setup Fees: Usually it starts from $100. The hardware is also available on Lease, but that is not recommended. It is always better for a merchant to make an outright purchase. Some charge it right out at the beginning, while others add it into the solution purchase/lease costs.
- Discount Rate: This is a percentage of each transaction amount that is typically charged by the credit card company. Discount rates will be between 2% and 4 %. It also includes certain percentage for merchant account provider. For example, if the discount rate offered is 3%, and you receive a sale over your web site for $20, you will owe 60 cents to your internet merchant provider.
- Transaction Fee: In addition to the discount rate a transaction fee is also deducted from the purchase cost. Also, just as with discount rates, transaction fees are lower for retail businesses while slightly higher amounts are charged for MOTO and Internet establishments. Usually between $0.20 and $0.30 per transaction. Transaction fees will also vary according to nature of your business. They are lower for retail establishments compared to online or mail order based businesses.
- Annual Fees: This fee purely depends on your merchant account provider. Some providers waive this fee completely, while others may charge up to $100 a year. One must always find this cost out from the provider before signing up.
- Gateway Fees:This is a fixed monthly fee that virtually all gateway providers charge (the actual rate may change though this rate is very good). This fee is for the use of the gateways transaction processing services and usually includes items such as online payment cancellations and transaction reports. The usual fee to pay for gateway access is around $10.
- Statement Fee:This is a fixed monthly fee that virtually all merchant account providers charge (the actual charge may change though this particular rate is also very good). This is a handling fee and though it is called “statement fee” by most merchant account providers we have seen it called “Monthly Service /Support/ Statement” which is more accurate.
- Address Verification Fees (AVS): The AVS service checks to see that the billing address given by the customer matches the credit card. If you opt not to use AVS, VISA and MasterCard will not support your transactions and will charge you an additional 0.17% to 1.25% on those sales. Most merchant accounts come with AVS at no extra charge. If there is a charge, it is combined in with the per transaction fee in most cases. The AVS service works only with US credit card holders. Currently, there is no AVS servicein place for non-US credit card holders.
- Chargeback: A chargeback occurs when the cardholder disputes a charge that they found on their monthly credit card statement. A large number of chargebacks can cause your merchant account to be dropped totally and leave you in a bind when trying to get another merchant account for your business. If this is the case you may not be able to get another merchant account for several years. As a merchant it is important that you take the necessary steps to reduce and potentially eliminate the instances of chargebacks. Chargeback rates vary; they can be $5 or $20 for a chargeback occurrence.
Look out for the above- mentioned rates and also hidden charges that come with an instant credit card merchant account. These charges however may not be explicitly communicated to you and may be hidden.