The Finance Blogger


Merchant Credit Card

There is hardly a business today that does not have the need for a merchant credit card service of some kind. Most business transactions that are done today with their customers are either debit or credit card transactions and if you do not have offer this service you run the risk of losing business. Long gone are the days when people carried enough cash around to pay for whatever they purchased. Checks are also not generally used any longer and besides there is too much opportunity for fraud with people trying to pass bad checks. Small business operators all the way up to large business must have the means to accept business credit card transactions today.

Merchant Credit Card – How are the Fees Determined

This service is typically offered by a number of financial institutions and there are various levels of fees that may be charged.  Before we get into the fee’s, the service you purchase will usually be for a defined term up to three years in length with cancellation charges if you decide to opt out of your contract before it is completed. Be careful of the credit card companies that claim to offer to no cancellation fee. It is usually somewhere in the fine print that many people do not bother to read.

The fees that are charged are also based on the number of transactions you expect to process each month, the amount of money that is anticipated to be processed  and your company’s credit rating. Volume of transaction can affect the amount of processing needed and communications required. Support for fraudulent transactions etc are usually a percent of total transactions and also the type of business that you are in.

Amount of Transactions and the Average Size of the Transactions

Large transactions with a small number of transactions will be treated differently that a large number of transactions and a large amount of money being processed. Providing an accurate estimate of the number and type of transactions will have an impact on the fees that you will eventually pay. The company’s credit rating or your credit rating in the case of a sole proprietor also will impact the fees that the financial institution decides to charge.

Type of Business

Sometimes even the type of business that is applying for a business credit card service will affect the fees. Different businesses have different reputations for fraud, for numbers of transactions and size of those transactions. All of this is taken into account prior to the final fees for your merchant credit card account being finalized.

What are the Fees for a Merchant Credit Card Service

First there  can be an application fee from $0 to around $500 that is charged all customers. Next there are statement fees that are charged for printing or making a soft copy to send to the merchant. Usually there is a transaction fee that is calculated per item based on a fixed rate or a percentage of the amount up to some agreed to maximum per transaction. There can also be a fixed or variable cost per month for these services whether you use them or not.

Business owners should compare several services that offer merchant credit card accounts and then select the one that makes the most sense for their business, the number of transactions per month, the fixed fees, the variable fees and the fees that are considered a minimum amount unless some threshold is achieved.

Not all merchant accounts are the same and they do not all charge the same amount. Sometimes you may have noticed that some businesses will not accept certain credit cards for example. This is due to the fact these cards charge the merchant too high a fee for processing a customer purchase through this particular card. It can be very frustrating to learn that the item you wanted to buy cannot be bought since the store owner will not accept your card.

Consider all of these issues before you make your decision regarding which merchant credit card service to utilize and always ask your bank for a negotiated discount to the fees.

For many more posts about managing credit cards, click here.

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One Response to “Merchant Credit Card”

  1. The following are the benefits that you have to be aware of the most.

    As with everything else, it is only the mindset of the entrepreneur that dictates the success
    and failure of a company. When travelling, for instance, it would be possible to login to your accounting database and enter transactions
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