Merchant Account Fees You Can Avoid

All merchant accounts come with fees. There is no way to avoid it. It is the cost of having a convenient service for you to use in order to help you accept credit cards. However, there are some merchant account fees that you can avoid. The key is speaking with your account representative and determining ways to save money on the costs and fees associated with using merchant accounts.

Here are some of the merchant account fees that it should be possible for you to avoid:

Gateway fee

This is a fee – sometimes flat – that your merchant account provider may charge you for processing credit cards and other transactions in real time. You can avoid this merchant account fee by agreeing to have the cards processed later. It is not completely necessary to have your transactions processed in real time. The downside of this, however, is that you may not be able to determine, immediately, whether or not a customer’s account has enough room for the purchase. This means that you may find out later that the customer’s payment did not go through. Sometimes, if you have a great many transactions that can be subject to a transaction fee, a merchant account provider may waive the gateway fee. It never hurts to ask.

Swipe terminal hardware fee

The swipe terminal is the actual machine that is used to swipe a credit or debit card. The swipe terminal is necessary if you accept cards at a physical location. For an online card transaction, your merchant account provider has software that provides the same service. If you lease the equipment or software from the merchant account provider, you will be charged a monthly fee. This can really start to add up. In order to avoid the fee, you can buy your own equipment rather than pay the merchant account fees. It costs between $300 and $1,000, depending on the type of equipment or software that you buy. Most merchants find that they save money in the long run by buying their own equipment.

Programming fee

If you change merchant account providers, chances are that you equipment will need to be re-programmed, resulting in more merchant account fees. This is especially true if you own your equipment or software instead of using the equipment offered by your merchant account provider. Leasing can mean that you don’t pay this fee. However, the merchant account fee, which usually in not that much, is less than leasing the equipment over time. You can also ask your merchant account provider to waive this fee, since you are switching from a competitor.

Batch fee

At the end of the day, many times your account transactions are “closed out.” This is known as running a batch. In order to compile your daily transactions in a batch, some merchant account providers will charge a fee. Some merchant account providers do not charge a batch fee, and it is worth shopping around to find a merchant account that does not nickel and dime you with all of these unnecessary merchant account fees.

Chargeback fee

When a customer’s card does not clear, or if merchandise is returned, or if fraud takes place, you might see a return on your account. This is known as a chargeback. Often, there are merchant account fees associated with chargebacks. The merchant account provider may charge flat fees ranging from $15 to $45 for each chargeback. This merchant account fee is pretty much unavoidable. But you can get a lower fee – saving money on fees – if you shop around to find out what is charged by different merchant account providers.

Annual fee

There is no real purpose to charging an annual fee – and no reason that you should pay this fee as part of your merchant account fees. An annual fee on your merchant account is much like the annual fee charged by many credit card companies. It exists solely for the company to try and get some additional revenue from you. Do not pay an annual fee. Shop around until you find a merchant account provider that does not charge an annual merchant account fee.

Reserve fund

This isn’t really a fee per se, but it is a device that can limit your cash flow liquidity. Some merchant account providers may actually require that you keep a certain amount of money in a reserve so that chargebacks can be covered. If you do get a merchant account that requires a reserve, make sure that you insist on not having a chargeback fee if there is money in your account. However, unless you have an account that has high risk of chargebacks, you should sign up for an account that does not require a reserve.

Cancellation fee

Many merchant account providers will require you to sign a contract specifying a length of time for which you will use their services. These contracts often come with a cancellation fee that you will pay if you switch merchant account providers or close your account before the time is up. This is usually a rather expensive flat fee. Avoid signing a contract with merchant account provider that has a cancellation fee attached, or, if you already have, see if you can work with the provider until your contract is up.

There are other fees as well that you might be able to avoid. Question every fee that the merchant account provider presents you with, and ask for a comprehensive list of all merchant account fees before signing up. Compare fees from different merchant account providers; this will help you avoid some of the unnecessary merchant account fees.