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TAKING A CLOSER LOOK AT THE FEES
ASSOCIATED WITH MERCHANT ACCOUNTS
If you are the owner of a business
entity then have a merchant account set
up for your business is very important
as it not only allows you to accept
credit card payments from your customers
but also helps you to systematically
arrange your transactions. However,
since you know that there are no free
cups of tea in this world, it is the
same with merchant accounts. There are
several kinds of fees that you have to
pay if you open a merchant account.
Therefore, you have to do a lot of
research as to which services are
required by for your business and which
are not. Also there are a whole lot of
service providers out there in the
market and hence you should choose the
best one.
The fees that are applicable for
merchant accounts are:
Each time your customer uses his/her
credit card to purchase a product from
your shop; you have to send his credit
card details to the bank which gave him
the card. Only after the bank authorizes
the card you will be able to go ahead
with the transaction. The bank or your
service provider will charge you for
this process and it is termed as the
Authorization fees. The disadvantage of
this fee is that, even if the card is
declined the fee is charged. This is not
similar to the, per item fee or the
transaction fee that is charged for
merchant services.
Your merchant account provider will
charge you a fee every month to provide
the statement for that month which is
termed as the statement fee. This fee
comes as a cumulative sum with your
monthly statement that has all the
transactions for the month and also the
fees that are applicable to your
account. This fee is not similar to the
minimum monthly fee.
A few merchant services need their
customers to pay for it. There is a
minimum amount that the merchant has to
cover every month for such services. If
the merchant is unable to get the
minimum amount then he will have to pay
it from his business profits or forfeit
the service. For example, suppose the
minimum monthly fees is hundred dollars
and the merchant was able to make only
seventy five dollars from his customers,
then the additional twenty five dollars
will have to be paid by the merchant.
When your customer wants a refund due to
a dispute, the merchant is compelled to
return the amount. This is called as
“Credit Card Chargeback”. Having several
charge back’s pose a high risk to
merchant services as they are
responsible for the money. MasterCard
and Visa have a condition that permits
only one percent charge backs every
month. Suppose the percentage is higher,
then the merchant account provider will
have to pay the fines ranging from five
thousand dollars to twenty five thousand
dollars, which are promptly passed on to
the merchants.
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