HOW MUCH ARE YOU PAYING FOR YOUR
HIGH RISK MERCHANT ACCOUNT?
A merchant account is absolutely
essential for the success of your
business in the competitive business
world of today. However, you should be
careful not to pay more for your
merchant account or it will be eating
into the profits of your business. Also,
the small business owners biggest
frustration is, they do not understand
what they are paying as fees and charges
to the merchant providers. They are also
unable to calculate what their fees for
the next month will be as they have not
understood the fees and rates. The
reason that is causing this confusion is
because the merchants are not worried or
do not take the pains to understand
anything else other than the discount
rate that is applicable to them.
Unfortunately, many account providers
take advantage of this fact.
The discount rate is one of the many
fees that the merchant will have to pay.
Some of the other fees and charges which
are applicable to any merchant account
Batch or ACH fee
Monthly statement fee
Non-qualified discount rate
Mid-qualifies discount rate
According to the terms and condition of
your processing company you may be
charged other fees such as:
Customer Service Fee
Early cancellation fee
Merchant club fee
Monthly Minimum fee
The most efficient method to find out
how much you are paying for your
merchant account each month is: the
amount of fees that is charged should be
divided by the total processed volume
for the month. For example, suppose you
have to pay $80 as fees for a processed
volume of $2000 then, you have to
calculate 80/2000 which is 0.04.
Therefore, your merchant account
provider is charging you 4% a month as
his fees. This is called the effective
The industry standard for effective rate
is 2% and therefore, if you are paying
4% then you will be paying a high rate
which is not advantageous for your
business. “The Effective Rate” is the
sum of all the fees that is charged on a
merchant account which includes
qualified discount rate, per transaction
fees and statement fees, among others.
Beware of the fact that, if you sign a
contract with a discount rate of 1.69%
and think that you have made a good
deal, then you will get an ugly shock
when you see your monthly statement.
Therefore, to get a good deal for your
company you must look into all the
different types of fees, before signing
any contract. Do not hesitate to ask
questions as it is you who will be
paying the money. Therefore, look for
merchant providers who offer transparent
contracts, no matter if the company
offers a little higher discount rate.
One more important factor to keep in
mind is what kind of transactions you
will be doing and its frequency. You
should never get an account for one kind
of transaction and perform another kind.
one of our helpful account
representatives to assist you in the
high risk merchant account or
offshore merchant account for a
high risk merchant.