Fees Incurred In Merchant Accounts

Modern businesses cannot thrive without merchant accounts. According to research, a merchant account “is a contract under which an acquiring bank extends a line of credit to a merchant, who wishes to accept payment card transactions of a particular card association brand. Without such a contract, one cannot directly accept payments by any of the major credit card brands”.

In this method, payments are made through the means of credit and debit cards. Credit and debit cards are better than carrying cash around, which is no less than a serious risk. Plastic cards reduce the risk of fraudulent activities. As per data, it has been seen that business owners miss potential sales due to the lack of merchant accounts. Customers prefer paying through credit and debit cards, as they are secure and easily accessible.

The creation of merchant account depends on the risk the business entails. If the business is of more risk then the chances of a bank, accepting the application is less. Retail businesses are a top contender for preference. Anyhow, after the merchant account is set up, an initial deposit of $150-$300 is necessary to take care of miscellaneous expenses such as internet discounts, transaction fee, charge back fee, or a reserve fee.

Below is a list of the numerous fees with a short description:

Authorization Fees- charged per transaction to the ‘card issuing bank’ for authorization. This is different from transaction fees.

Statement Fees- a monthly fee charged on the merchant for providing with a monthly processing statement.

Monthly Minimum Fees- is to be submitted by the merchant to the provider to maintain miscellaneous expenses and minimal profits. The monthly minimum fee is necessary even if the amount processed is less than the previously agreed minimum fees.

Batch Header Fees- charged to the merchant every 24 hours when the merchant sends the daily transaction details for processing to the banks. A higher fee is charged if the time exceeds 24 hours, especially on the Visa and MasterCard.

Annual Fees- some providers charge them for maintaining the account. The fee varies between $49 and $399.

Customer Service Fees- is charged by providers to pay for maintaining customer service.

Termination Fees- charged by the provider when the merchant chooses to close the account prior to the fulfillment of the contract. Generally, the period of contract is 1-3 years.

Chargeback Fees- a matter of high risk for the bankers and providers. If the merchant indulges in illegal activities, then the provider is required to return the money to the customers. To prevent such situation, a policy is there wherein the merchants are needed to keep a required amount from which the charge backs will be cleared, if the need arises. If the minimum amount isn’t available, then fine is levied between $5000 and $2500. In addition, the merchant is charged an extra amount of $15-$30 for processing the charge back amount.

Irrespective of the fees incurred, www.powerpayservices.com merchant accounts are the best method for business transactions.

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