The Credit Card Question - Fees and Other Questions
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You need to be aware of all the fees your merchant account provider charges. There might be quite a few. For instance, some companies will charge an upfront application fee, supposedly to cover the initial cost of processing your application. It can cost as much as $25, but some companies charge as little as $10 and others waive it entirely.
Another fee you might encounter is a set up fee. Different merchant account providers charge different fees, and may vary their fee based on the products and/or services you sell. Some providers charge nothing, others may charge nearly $200.
You might also encounter a fee for the virtual terminal. A few years ago, when online sales were just taking off, some companies sold their virtual terminals for up to $2000, or leased them for $39 to $59 per month on a four-year contract. Prices are lower now, making it important to shop around. Some companies even charge nothing for the terminal, though there is usually a monthly fee of $10 to $20.
Practically every merchant account provider charges some kind of ongoing fixed fee that you will have to pay every month regardless of how many sales you make. This is often called a “statement fee.” Again, shop around; this shouldn’t cost you more than $10 per month.
You will pay something called the discount rate. This is the sales commission that the merchant account provider earns on each sale. Depending on the card, this will be between two and four percent. For each transaction, it is not large, but it can add up; after all, it is how your provider earns its bread and butter. For a $10 sale on your website, your merchant account provider will charge you $0.30.
That’s not the only per-transaction charge you will have to pay. You will also encounter a fixed transaction fee. Fortunately, this fee is the same regardless of the amount of the transaction. If the fee is $0.20, it doesn’t matter whether the sale is $1 or $100,000, the fee is still only $0.20.
Read the fine print carefully, and you might find a termination fee. This will apply if you cancel your merchant account within a certain period of time. Usually this is only one year, but some contracts specify two years. While you’re reading that fine print, you might want to hunt for other miscellaneous fees. For instance, some merchant account providers issue a chargeback fee – a fee they hit you with if a customer disputes a sale. In that case you would not only have to refund your customer’s money, but also pay the chargeback fee. Some merchant account providers will even cancel your account if you have too many charge backs on it.
What do you get for all these fees? Well, aside from the ability to accept credit cards, you should get excellent customer support, both via telephone and email. In fact, it is possible to find a merchant account provider that offers 24/7/365 technical support over the phone; they are worth shopping for, especially if you can find one that doesn’t charge an additional fee for this service. If you can find a merchant account provider really willing to make your life easier, you should also be able to get preconfigured shopping cars and web payment forms. That means you won’t have to do anything to your website – everything is set up for you.
You should also get fast service. Some merchant account providers will let you do it all over the Internet in minutes, and have you ready to accept credit card payments within hours. There are even some that don’t lock you into an annual contract, but let you work with them on a strictly month-to-month basis.
In short, you will have to do your homework, but you should be able to find a merchant account provider that suits your needs perfectly. Once you do, you’ll find the ability to collect credit card payments can increase your total sales anywhere from fifty to 1000 percent. Happy selling!
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