Banking is directly or indirectly related to the monetary terms and costs. The banks charge a specific amount of money to provide various services to its customers. There are different costs incurred in different types of merchant account. In the modern economic theory, merchandise business would be of great advantage if a merchant has full advantage over another in the same line of production and the other merchant also has an advantage over the first merchant in another line of production. When the comparative cost advantage is different, the trade will rise and can be continued for a longer time in the future. Below given is an illustration of the matter. Let us see how it works.

For instance, there are two merchants doing the same type of businesses. Merchant ‘M’ and Merchant ‘O’.

Merchant M’s business = marginal cost of processing VISA card is  up to five dollars and marginal cost to process MASTERCARD is 10 dollars.

Merchant O’s business = marginal cost of processing MASTERCARD is up to 6 dollars and the marginal cost to process VISA card is up to 4 dollars.

Here, we can see that merchant O can process both VISA and MASTERCARD at a cheaper rate than merchant M. But the comparisons of cost are higher for processing MASTERCARD in merchant M’s business. Merchant O has an absolute advantage for processing both the credit cards at cheap rates.  Thus merchant M and merchant O’s business ratio is 1:2. Merchant M will, therefore, pay the merchant O to specialise in processing of credit/debit cards.

The monthly fees of the statements are charged by most of the internet service providers. The fee ranges below ten dollars. The more number of transactions takes place, the more discounts a merchant account holder can get for processing of the credit or debit cards. A minimum monthly fee is charged which is mandatory. This monthly fee is about twenty five dollars only. Commission, as discounts, are given to the merchants for processing the credit cards. There is a fixed charge for processing of the debit/credit cards. It may be 1 dollar to 2 dollars for each transaction. The volume of sales may be more or less but the fee per transaction is the same for any sale volume. Dealings or transactions, which are made through internet banking services of a merchant account does not require a card terminal. But in other merchant businesses like restaurants and other small retail businesses, a credit card terminal is a must. The cost of the credit card terminal ranges from one hundred and twenty dollars to one thousand dollars each. Other devices like a computer, a barcode reader and cash drawers are also needed for this kind of businesses. This will increase the cost of the merchant account holder but it can be compensated by the margin of profit. If any merchant’s discount rate is fixed to 4 percent of the total value of sales, then if he/she makes a sale of twenty dollars then the merchant gets a discount of eighty cents.

But if a customer is not satisfied with the services, he/she may ask for refunding of the money. Refunding is also done via the same credit card which a person holds. But there is a chargeback fee of about ten dollars to twenty dollars for the cancellation. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.