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Merchant Accounts
When comparing the cost of internet merchant accounts there are three major areas you need to evaluate - Set-Up Fees, Monthly Recurring Fees and Total Risk Estimate (TRE). After reading and fully understanding this section of the guide, you can use the worksheet in Appendix A to help you compare the fees and risks from various providers. This worksheet is also available in an Excel spreadsheet. If you did not get the spreadsheet just use the contact information at the bottom of this page to have one emailed to you.

Setup Fees - Setup fees are the costs associated with starting the account and "going-live." Note that setup fees are normally non-refundable, (except through our Independently Owned Agency of Cardservice International) Our Agency offers a 100% Money Back Guarantee of any upfront fees. While searching for a Merchant Account Provider you may find companies which advertise free setup fees. As shown in other sections of this guide, totally free start-up often means poor service and hidden fees down the road - but not always. Setup fees should be very reasonable but if you see free setup fees, proceed with caution. The following is a summary of setup fee terms you may hear.

Application or Setup Fee - A one-time charge for processing a merchant application and activating the new merchant account.

Re-programming/Programming Fee - A charge assessed for reprogramming your existing terminal, software, or Point of Sale (POS) equipment. You know that you are talking with a commission sales person when he or she insists on a "reprogramming fee". You should negotiate this. If you are anticipating any kind of credit card sales volume at all than you can probably get this fee reduced or waived.

Site Inspection Visit - A Merchant Account Application sometimes requires a "site visit" of your place of business to make sure you are legitimate.

Installation or Training Fee - If the company has good customer support, this is just an excuse to add fees. Don't pay any.

Activation Fee - If in addition to an application or set up fee, it's probably just an excuse to add fees. Don't pay any.

Software Licensing Fee (Internet) - You may run into this, particularly if you are licensing software to do business over the internet. Do NOT lease software.

Shopping Cart and Catalog Setup Fee (Internet) - A shopping cart and catalog is a tool to both total the amount of money a customer wants to pay you on the internet and a system to organize your products prior to ordering on the internet by the person viewing your website. Setup fees vary depending on the sophistication of your needs and your number of products. If your needs are very sophisticated - which is rare - you may pay much more because you need a customized solution.

Recurring Fees - Recurring Fees are primarily the monthly fees to process and track transactions and pay the Merchant Account Provider.

Discount Rate - A percentage charged on the volume of a sale or a returned (credit) transaction. This can be from 1.4% on up depending on your transaction fee and whether you use a terminal and "swipe" the credit card in a "card Present" environment; or key the credit card information into a terminal, software, or on the internet. Generally swiped rates are about 1.5% to 1.85% and keyed rates are 2.25 to 2.75%.

Transaction Fee - A charge assessed per each type of authorization submitted by a merchant. Try to "bundle" your discount rate so you do not have a transaction fee. Your rate will be higher but by doing this you may be able to save on the transaction fee for authorizing a transaction which you later void; and also save on the transaction fee when you batch out your transactions - typically each day. A transaction fee usually ranges from a dime to thirty cents per transaction.

Monthly Customer Support Fee - A charge that should ensure quality customer service 24 hours a day, 365 days a year. Customer support should be Toll Free and you should not have to stay on hold to speak with someone.Should English not be your language of choice then customer support should be available in your language. Call at variable times - including weekends - before you commit to a Merchant Account Provider. You will need good customer service which is available for no additional charges.

Monthly Statement Fee (hardcopy) - Should be available online.

Monthly Minimum Fee - A fee charged if the total monthly discount rate amount for MasterCard and Visa does not reach a threshold. Usually you do not need to worry about this if you are expecting MasterCard Visa sales to be more than $1,000.00 per month.

Daily Batch Fee - Monthly fee paid for processing each daily batch. Batches are typically processed each day the merchant has transactions. This should be no more than your actual transaction fee per batch. Merchants typically batch out each day.

Annual Fee -. Annual fees, if any, usually range from $50.00 to $150.00.

PCI Compliance Fee - Typically this will be an annual fee to make sure you are not putting your customer's credit card information at risk. Depending on your transaction volume you should not have any monthly fees once you are in compliance

Address Verification Service Transaction Fee (AVS) - A storefront Merchant who is swiping cards on a terminal will not have an AVS fee for swiped transactions. However, all orders that are keyed; whether storefront, mail/telephone order, or internet, shall many times have an AVS transaction fee. This should be no more than five cents for each transaction that AVS is attempted.

Monthly Secure Payment Gateway Fee (internet) - A charge assessed to provide merchants with the ability to process transactions securely over the Internet. This should range between $10.00 and $30.00 per month.

Monthly Shopping Cart and Catalog Fee (internet) - Many times your shopping cart and catalog for your internet web site is hosted with the shopping cart and catalog hosting company.

About the Author
A Word About Our Membership Community
Frank Merchant knows how to get the best price
The Internet Marketplace
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6 Benefits of Accepting Credit Cards
Disadvantages of Accepting Credit and Debit Cards
Who are the players? How does the money get in your bank account?
Credit Card Transactions Step By Step
Should I go visit my banker for my merchant account?
How can I tell if I will get good customer service?
Be on the Lookout for Deceptive Sales Practices
How to Avoid Your Money Being Held By Your Non-Cash Transaction Processing Company
Banking Terms You Need To Know
Benefits of Debit as a Payment Option
What You Need To Know About Leasing a Credit Card Terminal
Fraud Protection 101
Cardholder Security: Avoid Monthly Fees, Fines, and Penalties What Is PCI Compliance (PCI DSS)?
Four Key Components to Conduct eCommerce Successfully: What They Are, and How They Work
Web Site
Your Merchant Account
Secure Payment Gateway / Payment Transaction Software
Shopping Cart and Catalog
Should I use a third party processor like PayPal?
Quick Summary of Costs
Detailed Summary of Setup Fees, Recurring Fees, and Risk Estimate
Total Risk Estimate (TRE)
Total Risk Estimate Worksheet (Low-Medium-High)
Are you being stung with "Non-Qual" fees for keyed orders?
Have You Ever Felt Betrayed By Your Credit Card Processing Company?
Your Customers' Credit Card Numbers at Risk
Visa: Heartland, RBS WorldPay no longer PCI compliant
Marketing 101: Gift and Loyalty Smart Card Technology Ensures Customer Loyalty
Check Warranty and Check Acceptance Policies
How Can I Prevent Credit Card Fraud?
Identity Theft
Merchant Account Comparison Worksheet
Credit Card Terminal
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