Doing business has all sorts of fees and costs associated. And it doesn’t matter what line of business you’re in! The fees may be different, but there are always additional costs of doing business. Today we’re going to talk about a very common one that a lot of businesses pay: merchant account fees.

Merchant Account Basics

First things first - let’s define what a merchant account is. A merchant account is simply what you need to be able to process credit cards. Essentially you are given a line of credit through a bank, and that allows you to process credit cards either through a physical terminal or online gateway.

In order to accept payment from credit cards you have to have a merchant account. If you have a retail store you’ll also need a terminal to swipe someone’s card. If you do business online or by phone, you will be ok just using an internet gateway to process the cards.

What are the Different Merchant Account Fees?

As with everything, merchant accounts have their own fees as well. You’ll have to consider these to be just another cost of doing business. Keep track of what you’re paying so you know how it affects your bottom line.

The main fees that you’ll have are the statement fee, gateway fee (if using a gateway), and the discount rate. The statement fee is usually around $10 a month and covers the merchant account company creating and sending you a statement. This is mainly just their standard monthly fee, but they call it the statement fee. If you have an internet gateway, you’ll have to pay a standard monthly fee for that as well, usually around $10. A lot of companies will lump the statement and gateway fees together.

The discount rate is the other fee that you’ll get familiar with. This is the fee that a merchant account company charges on a per transaction basis. It is broken up into a flat fee and a percentage. You can use these rates as a way to compare different merchant accounts.

Depending on the merchant account company you work with you may have other fees that you’ll need to be aware of. Some of these are a batch fee, chargeback fee, early termination fee, and others. Make sure to check the terms of your agreement for more details on these merchant account fees.

Calculate Your Costs

It’s always sad when someone comes to the realization that they aren’t making as much money as they thought because they forgot to include merchant account fees into their profit margin calculations. These fees are a necessary part of doing business, so it’s important to know what you’re paying.

There are always costs associated with doing business. This is true no matter what line of business you are in. If you’re in manufacturing, retail, or any other line of business you have costs that you have to be aware of. Today we’re going to focus on merchant account fees.

What is a Merchant Account?

Here are a few basics about merchant accounts. A merchant account is what gives you the ability to process credit cards and get paid for your products and services. Part of the process is entering into an agreement with a bank to have a line of credit for processing the cards.

If your business involves taking credit cards as a form of payment, you’ll have to have a merchant account. If you have a physical store you’ll also need to get a terminal. If you do business online or via the phone you’ll be fine with just an internet gateway.

What are the Different Merchant Account Fees?

As with everything, merchant accounts have their own fees as well. You’ll have to consider these to be just another cost of doing business. Keep track of what you’re paying so you know how it affects your bottom line.

The main fees that you’ll have are the statement fee, gateway fee (if using a gateway), and the discount rate. The statement fee is usually around $10 a month and covers the merchant account company creating and sending you a statement. This is mainly just their standard monthly fee, but they call it the statement fee. If you have an internet gateway, you’ll have to pay a standard monthly fee for that as well, usually around $10. A lot of companies will lump the statement and gateway fees together.

A third fee you’ll come across is the discount fee. This fee is broken up into two parts. The first part is a flat rate, usually somewhere around $0.30 per transaction. The second part is a percentage fee that they take from each transaction. This rate will depend on your merchant account, so use it as a way to compare different companies.

Depending on who your provider is you may also run into other fees. These include a chargeback fee, customer service fee, batch fee, and others. Make sure you are aware of all of the fees before signing up with any company.

Make Correct Profit Calculations

It’s important to stay on top of how much you’re paying for your merchant account fees so that you don’t lose money you don’t need to. It’s always a sad day when someone realizes that they thought they were making a larger profit than they actually are because they forgot about a fee they have to pay. Keep on top of your fees, and be sure to shop around from time to time and find better deals.

Online shopping has become so common place; it is difficult to believe that there was a time almost no one would consider it because it was unsafe. As common as it is now, you should still take precautions to make sure that your payments are secure. There are still many sites which trick you into giving your credit card and/or banking information when they have no intention of sending you anything. Here are some tips to help you ensure that your payments are safe:

- The padlock in your browser does NOT mean a website is safe. Often people do not fully understand that the padlock only means that you have a secure online connection and not that the website is safe. Click on the padlock to read the sites security message. It should have the name of the company. Make sure it is a name you can trust.

- Before you make a payment, make sure your browser says “https://.” and not just http://.

- Newer browsers look for secure sites so your address bar may turn green or red. If it turns red-STOP!

- When possible, use a trusted payment site such as Paypal.

- Check the company with the online Better Business Bureau.

Thankfully, most consumers are not held responsible for fraudulent purchases but in the long run we all end up paying. Besides that, there can be a lot of red tape involved in proving a purchase was fraudulent. It is better to take precautions before entering your credit card information than to be sorry afterwards.

Most respectable businesses use a trusted site to vouch for the validity of their business. If you are ever in doubt as to whether a payment is secure, dont make a payment. Online security concerning payments is getting better but it is by no means fool-proof yet. Most companies will use PayPal or Bill Me Later but not all. Since there are new online stores popping up every day it is important to check the safeguards that are put in place to help you know your payment is secure. Most online stores will also have a customer service number or an address that you can check. When in doubt, dont pay out.

Credit card charges increase dramatically due to fraudulent sites. Even if you are not held responsible for a particular charge, you will end up paying in higher credit card fees or store fees. Fraudulent sites affect everyone whether they are victims to the sites or not. There will always be unscrupulous people and fraudulent sites. All you can do is check the safeguards and tips that are currently available to be sure you are making a payment through a secure payment gateway.

You should never take chances when it comes to your credit card and/or bank information. If you do, you could fall victim to the many fraudulent sites that are online which ends up costing everyone extra money.