Credit Card Processing Rates & Fees

Merchant Account & Credit Card Processing Rates & Fees

It's a good thing that the Merchant Council is an electronic resource. If we had to physically reprint this guide every time a credit card processor came up with a new type of fee we would have to chop down every tree in the free world just to have enough paper. This is a good time to mention that our newsletter is sent whenever our guides are updated. Changes in processing rates, fees, and regulations are the leading cause of these updates. If you would like to be notified of any updates via email you may do so by joining our newsletter here.

It's no secret that there are a lot of fees associated with merchant accounts and credit card processing, but many of these fees do not or will not apply to someone who knows how to use their merchant account properly. In order to use your merchant account properly, you must first understand what all of these fees are and why they are charged. Once you understand why each fee is charged, you may be able to avoid the behavior that makes you incur the fee.

4-1 General Rates and Fees

The following is a list of rates and fees associated with all types of merchant accounts. Bookmark this list so that you can reference it quickly when researching merchant account providers for your business.

Beside each fee in the list below is a small icon that illustrates the likelihood that you will be able to work with a merchant service provider to have the rate or fee lowered or changed. Remember that it is unlikely and unrealistic to expect that you will be able to have a provider lower EVERY fee to the bare minimum. Instead of trying to get every fee lowered, concentrate on having the fees lowered or waived that matter most to your business. For instance, if your business is seasonal, you will want to have the monthly statement fee and monthly minimum fee lowered, so that you don't have to pay them in your off months. In order to have these two fees lowered you may have to allow the processor to leave the discount rates and transaction fees where they are.

The key below explains what each different color dot means. Each different color dot illustrates a merchant service provider's typical willingness to will lower or waive the fee beside it in the list below.

Most merchant service providers may be willing to........
- Lower or waive this fee (with enough coaxing, of course).
- Lower this fee but will not waive it totally.
- Lower this fee, but they will be reluctant to lower it much if at all.
- Most merchant service providers will almost never budge on this fee.

Please note that these lists are very comprehensive and not all merchant services providers charge every fee listed. The following fees are listed in alphabetical order.
This list is the property of the Merchant Council. Do not copy this information.

Account Maintenance Fee - The account Maintenance fee is charged by the provider to perform changes to the merchant account after it has been set up. Changing address information, banking information, and business name would all be considered account maintenance tasks and may incur an account maintenance fee.

ACH Reject Fee - An ACH reject fee is charged when a processor tries to electronically withdraw fees for processing services and there is an insufficient balance in the merchant's account. The merchant bank (your bank) rejects the processors ACH draft request and the processor charges the merchant an ACH reject fee for their troubles. An ACH reject fee is very similar to a returned check fee charged by a bank when a check is written against an account with insufficient funds.

Annual Fee - An annual fee is a yearly flat fee charged to maintain a merchant account with the provider in question.

Application Fee - An application fee is charged by the merchant service provider to process the merchant account application paperwork.

Authorization Fee - An authorization fee is charged when credit card processing equipment obtains an authorization for a transaction that is run.

AVS Fee (Address Verification Service ) - The AVS fee is charged when a credit card transaction is processed and the customer's billing address and zip code are entered into the credit card equipment. The processor compares the billing information provided to the actual address and zip code on file at the issuing bank and returns a "Y" (or similar positive code) if the addresses match and an "N" (or similar negative code) if the addresses do not match. The fee that is charged to perform this service is called an AVS fee.

Batch Header Fee - A batch header fee is charged when a batch of credit card authorizations are sent from the credit card terminal or equipment to the processor. Every time a merchant clears his/her batch, his/her account will be charged a batch header fee.

Cancellation Fee - The cancellation fee is charged when a merchant terminates his/her merchant account with the processor or merchant service provider. The cancellation fee may or may not be governed by time constraints, meaning that it may be waived after an account remains open for a certain amount of time.

Change Fee - The change fee is very similar to the account maintenance fee, and is charged by the processor when changes need to be made to an existing merchant account. For instance, a request made by a merchant to have banking information changed on an existing merchant account would most likely incur a change fee.

Chargeback Fee - The chargeback fee is charged when a customer issues a chargeback against a merchant, and the merchant is unable to have the chargeback reversed.

Debit Monthly Network Fee - A debit network fee is charged on a monthly basis by some merchant service providers to allow a merchant access to the debit card networks.

Discount Rate - The discount rate is the percentage of a transaction that is charged as a processing fee. Discount rates are the most important fees on your merchant account schedule of fees and they are also the most unpredictable and complicated. The next section is dedicated entirely to the important topic of discount rates.

Qualified Discount
Mid-Qualified Discount
Non-Qualified Discount

Early Termination Fee - An early termination fee is charged when a merchant terminates his/her merchant account prior to the expiration date of the original contract. For instance, a merchant will incur an early cancellation fee if they sign a three-year merchant account contract and cancel the merchant account two years later. Some merchant accounts have a prorated early termination fee schedule, where the termination is lowered the longer an account remains open and eventually dropped.

Gateway Fee - A gateway fee is a monthly fee that is charged to host and maintain an online payment processing gateway.

Help Desk Fee - The help desk fee is a fee that is charged for customer service related issues. The help desk fee is charged when a merchant calls the processor or merchant service provider for assistance with their merchant account.

Monthly Minimum - The monthly minimum is the least amount of fees that a processor will charge in a monthly period. If a merchant does not meet the monthly minimum amount in any given month they will incur an additional charge that is equal to the difference between the actual fee on their merchant account and the monthly minimum amount. For instance, a merchant would have to pay an additional $10 in a month where the fees on their account totaled $15 and their monthly minimum is set at $25.

Over Limit Fee - The over limit fee is a percentage of sales that a processor will charge if a merchant processes in excess of their declared monthly processing volume. For instance, if a merchant declares $5,000 a month in processing volume and processes $7,000, $2,000 of their total sales are subject to an over limit fee. Over limit fees can be as much as %5 of excess sales volume and higher.

PIN Debit Fee - The PIN debit fee is charged when a customer pays for products or services using their debit card by entering their personal identification number into an encrypted PIN pad.

Reprogramming Fee - The reprogramming fee is charged by merchant service providers when they must reprogram existing credit card processing equipment to function with a merchant account that they issue. Reprogramming fees may be charged for all credit card processing equipment including terminals, gateways, and software.

Reserve Account Maintenance Fee - The reserve account maintenance fee is charged when a processor must keep a rolling reserve for a merchant. Rolling reserve maintenance fees are typically flat monthly fees assessed to a merchant's account.

Retrieval Fee - A retrieval fee is charged when a processor notifies a merchant of a chargeback against their account, and requests that they return supporting documentation to validate the charge in question. When the merchant returns the documentation requested by the processor their account is assessed a retrieval fee.

Return Fee - The return fee is charged when a customer's purchase is reversed and funds are restored to their account. Returns do not incur a percentage discount charge, but instead are charged a flat return fee.

Set-up Fee - A set up fee is usually charged by a merchant service provider after the merchant account application process has been completed and the account has been approved. The provider will then charge a fee to complete the set up of the merchant account.

Signature Debit Fee - The signature debit fee is charged when a customer uses their debit card like a credit card to pay for products or services. Instead of entering their PIN number into a keypad, the customer's card is swiped through a terminal. In order for a debit card to be charged via swiping, there must be a VISA or MasterCard logo on the face of the card. Debit cards that have a VISA or MasterCard logo on the front of the card are called check cards.

Statement Fee - The statement fee is a flat monthly fee that is charged by the processor to maintain a merchant account. The statement fee may be referred to using a number of different terms such as monthly maintenance fee, support fee, or monthly account fee.

Transaction Fee - The transaction fee is charged every time the credit card terminal, gateway, or equipment contacts the processor to get or give information. The transaction fee often piggybacks other fees such as the return fee or the batch header fee.

Voice Authorization Fee - The voice authorization fee is charged when a merchant contacts the processor via telephone to verbally authorize a credit card transaction.

Watts Surcharge - A WATTs surcharge is charged when a credit card processing terminal is unable to contact the processor using the default telephone number and it must roll-over to a toll-free number instead. Most terminals are programmed to call a local number that is routed to the processor. There is no charge for local phone service so no charge is assessed. However, if the local line is busy or otherwise inaccessible the terminal will dial the toll-free number and a WATTs surcharge will be charged to the merchant's account.

Wireless Service Fee - This fee is charged by a wireless carrier to provide wireless service, making it possible for a merchant to process credit cards remotely. The wireless fee is usually a flat monthly fee that allows a merchant unlimited access to the wireless network.

Wireless Transaction Fee - The wireless transaction fee is charged in addition to the normal transaction fee on wireless merchant accounts. The wireless transaction fee is usually charged by the wireless network provider, and not by the merchant service provider.

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