Merchant Account Monthly Minimum

A merchant account Monthly Minimum is the minimum amount of fees that will be charged to a merchant on a monthly basis, regardless of the merchant's processing volume. Monthly merchant account statement fees and maintenance fees do not usually count toward the minimum monthly.

The monthly minimum is not a true fee by itself, because it is dependant on processing volume. Instead, it is the amount that a processor will charge a merchant if their discount rate, transaction fees, and other account fees do not collectively equal a pre-determined amount.

For example:
Assume that a business has a merchant account with a discount rate of 1.7%, a per transaction fee of $0.25, and a monthly minimum of $20. In their first month, the business processes a gross amount of $1000 in VISA and MasterCard sales in 10 transactions. The fees on the account would be $17 (1.7% X $1000), plus another $2.50 ($0.25 X 10 transactions), for a total of $19.50. In this scenario the merchant did not meet the monthly minimum of $20, so they will be charged the difference between their actual fees of $19.50, and the $20 monthly minimum. In this case the merchant will be charged an additional $0.50 above and beyond their normal processing fees, in order to bring their total monthly charge up to the $20 monthly minimum.

A monthly minimum can usually be lowered or waived to accommodate merchants that have a lower monthly processing volume. Businesses that are processing higher volumes will not be affected by a monthly minimum, and should save their bargaining power for other fees that may have a larger affect on their business, such as a lower transaction fee or discount rate.