Article Submitted by: Future Finance Solutions
A small business will open a merchant account to accept credit and debit card payments with the intention of increasing sales and thereby increasing profits. But the fees charged for merchant accounts may not be as straight forward as they seem. There are many fees that are hidden from you and you only find out when you receive the monthly statement. Here is guide to some of those hidden payments and how you can avoid any surprise charges.
The quoted rate is not applicable to all cards.
You have been offered a very reasonable rate, but you will be later informed that the rate is only applicable to a certain type of card and all the others will be charged at a higher rate. Before you enter into an agreement make sure you get details of rates for each type of card you intend to use.
PIN debit transactions fees
Some merchant service providers charge a transaction fee for debit card transactions with a PIN, whereas some charge a monthly flat fee for it. If you do not receive a lot of debit card payments you should opt for a per transaction fee. Make sure that the transaction fee quoted is the only fee and that there will not be any other costs such as debit network fees added to the transaction fee.
You may be told by your merchant bank that there will be no annual fees charged from you, but the fees charged by the credit card companies will be passed on to you and it could cost over $60 per month.
Payment gateway fees
If you are going to accept credit card payments online you will be charged a payment gateway fee. This will be charged by the gateway provider. Find out whether there will be any additional monthly charges for the payment gateway.
Minimum monthly fee
Visa and MasterCard will levy a minimum monthly fee from to ensure that they will receive that amount every month irrespective of what your monthly sales volumes are.
Cost of terminal
Most merchant banks will offer you a free POS terminal, which is a very basic one. If you opt for a better model you will be offered to buy it outright or the option to lease it over a period of at least two years. The outright purchase price in most cases will be overpriced even if they offer a special price for you. Shop around for it elsewhere and you can but it for a much lesser price.