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Published October 29th, 2016 by

Know Your Merchant Services Fees to Be Able to Budget Effectively

Know Your Merchant Services Fees to Be Able to Budget Effectively

If your business considers credit and debit cards for payments, it is necessary to have merchant services (MS). An agreement between your chosen merchant services provider and issuing bank is made. You need to follow every rule created by both and this includes the many fees it may charge. This article talks about the most common merchant services fees that you most likely encounter.

What is Merchant Services?

The definition of merchant services is a type of software that handles any type of electronic payment transactions using merchants. These transactions usually involve transaction authorizations, sending payments, collecting funds, gathering sales or payment information and a lot more.

If you wish to acquire merchant services  or are considering changing to a new one, you can choose from many providers. You can find them easily, whether it’s online or by word of mouth. It is recommended to get the top merchant services so you’ll be confident that they are good, but you still need to choose the right one for your company.

What Are the Benefits of MS?

What are the advantages of merchant services? Using MS is extremely beneficial to those that have an online business. They are a great option if you’re a business that wants their customers to pay using credit or debit cards online. They provide options for your customers to pay you in any part of the globe, giving you the flexibility and a broad scope in payments.

You’ll be able to transmit payment information securely and quickly as it has security features and should confirm to PCI standards. It provides 24/7 customer service support. It provides the convenience and the speed of making a payment. Basically, it provides your customers another option for their payments, which is a credit or debit card transaction online.

However, there are some disadvantages if you choose the wrong MS. You have a higher risk in frauds or scams. You or your customers’ data may also be hacked. Make sure the merchant services software you choose is legitimate and has a good reputation to avoid these pitfalls.

What Are Some of the Fees MS Charge?

MS has a wide range of fees. They can charge you with monthly fees, ala carte fees or based upon a percentage. Budgeting is a must need in businesses, so it’s important that you understand the fees they charge and why you need to pay them. Below are just some examples of fees that you most likely will come across.

  1. Transaction fees. This is a flat rate fee that you are charged with for any kind of transaction processed. It may be by bulk or an individual purchase.
  1. Set up and application fees. By just starting an account, you may be charged with set up and application fees. Setting up or installing new equipment or maintenance costs may also be included.
  1. Early termination fee (ETF). If you are under a contract and cancelled your agreement early, you may be charged with an ETF.
  1. Gateway access fee. A payment gateway or gateway for short, is a method where it transmits your transaction data based on the processing system going to the MS provider. Some companies do not require this fee while others require a monthly payment for it.
  1. Monthly statement fees. This is your recurring monthly fees just for your monthly statements.
  1. Monthly minimum fee. This is a fee that you pay if you did not meet the minimum payment amount requirement you need in a month. This will also include the maintenance fee of your account.
  1. Chargeback fee. This is a fee that is used when a chargeback is made. A chargeback is done when the customer’s payment is returned to the customer. This is usually done when payments are suspected of being done fraudulently and needs investigation.
  1. Address verification fee. When an account is suspected to be fraudulent, it verifies and matches the address on the card and the one of file.
  1. Payment Card Industry (PCI) fees. These are paid for non-compliance or compliance with the PCI standards.
  1. Batch fee. This is done when you submit or provide transactions by batch.
  1. IRS report fees. This fee is charged when you need to provide transaction data reports to IRS.
  1. NSF (insufficient funds fee). As the name suggests, you will be charged when you don’t have enough funds in the account you use.
  1. Interchange fees. This is the fee your bankcard issuer or the MS merchant charge you per transaction. The amount would depend on the type of the card and size of the transaction.

No matter what industry you belong to, you should be able to know the cost of merchant services you may be charged. It is vital that you know all the fees and the service terms. Knowing what the costs are will make sure that you still have a profitable business. Always check on what you’re paying for. If they can’t explain the fees that they charge you, it might be best to switch to a different provider.

How Would You Know the Fees of MS?

Knowing how much an MS costs and their fees might be confusing to you. Their statements, rates or policies may be hard to understand or is unclear. Don’t just sign on something you don’t know or understand. Rather than just guess what MS charge or their fees, the best way to know is do research. If you would like to know the accurate price and description of MS in the market today, read on CrowdReviews.com’s merchant service reviews.

What Are Other Things to Consider Regarding MS?

Aside from the merchant services fees mentioned, you also have to consider these things:

  1. Hidden charges. Always look for a provider that is transparent with their rates. Ask for any ancillary fees that may be added to your bill. This includes IRS fees, batch fees, PCI compliance fees, annual fees and a lot more.
  1. Your contract. Before signing anything, make sure that you know everything in the agreement, especially regarding the financial side of it. You need to watch out for any cancellation fees, automatic renewals and the like.
  1. You might be charged with a set up fee or a technician fee when installing the software. Also, consider any upgrade or update fees in the future.
  1. Customer service. Your fees should already include the accessibility of contacting their customer support. It is recommended you get a provider that offers 24/7 support just in case you have any questions or technical difficulties.
  1. Know and find out the rates of your chosen MS. Consider the interchange, which is the direct rate of your credit card transactions using your credit card companies.

What Do Most MS Require?

It is quite easy to get MS but they still require some items before they give you an approval. A number of things might be considered. The more data you can provide to them about your business, the better the chance that your request can be approved. Here is a quick checklist of what merchant services usually ask for:

  1. Merchant application form. You need to fill up every important detail about your company. Don’t forget to fill up everything or else it will delay your approval process.
  1. Copy of Business IDs or permits. This is needed for them to verify your business identity.
  1. Copy of your bank account details. You must provide a bank account where you will use to get or send your deposits.
  1. Recent processing statements. This is only applicable if you are with a different provider. The timeframe will vary.
  1. Business profit and loss statements or balance sheets. This is needed if you need an extreme or large amount.
  1. Information about your products or services. A list of your products or services together with its rates or fees will be helpful in evaluating your application.
  1. Other documents about your business. More often than not, an inventory list is sufficient.

Please take note that MS providers are not the same and may ask for different requirements. Research on MS first and select the one that fits your business needs. You may check more on MS requirements and their features by looking at CrowdReviews.com’s top merchant services or just browse the website to find out other similar software for your company.

The industry in MS is very competitive. The fees and charges vary. It really depends on your needs such as average transactions, average sales volumes, number of transactions, risk pool and annual or monthly volume of payments. It would also depend on the type of card used. There is a variety of reasons why the prices or charges are different.

To help you in your search, know what features you want. Are you looking for one that has mobile app capabilities? Do you want a monthly subscription software? All of these can be found if you read on merchant service reviews at  CrowdReviews.com. This is especially helpful if you don’t have much time in consulting or researching the types of MS in the industry.

John Tovar

John specializes in the creation and planning of business-centric mobile applications and mobile website design and development.

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