In order to accept credit card payments for your online business, you will need both a merchant account and a payment gateway. A merchant account is a bank account that allows transactions to be deposited as they occur. A payment gateway, provides electronic communication with the customer's card issuing bank, to authorize funds almost instantaneously. However, these services constitute a number of fees that must be paid by the merchant. Therefore, it is important to shop around and know what costs to anticipate.
Overtime, one of the most expensive aspects of accepting credit cards is likely the discount rate. Discount rates are a percentage that is charged by your merchant account provider for each transaction that occurs. They vary depending on your annual sales volume and average transaction amount. However, you can expect them to fall in the range of 1.5%-5%, depending on the merchant account provider you select and your individual circumstances.
In addition, a transaction fee is generally charged for each sale. A transaction fee can be charged by either the merchant account or payment gateway provider. It is a flat fee that usually amounts to somewhere between 15 to 30 cents per transaction. This is why many companies will not accept credit cards for small purchases of a few dollars or less.
Set up fees, application fees, equipment fees, and statement fees are all commonly charged by a merchant account provider. However, some companies will tax on additional fees for various other services. Plus, payment gateways generally charge a monthly processing fee, in addition to a transaction fee. This is a flat fee that is assessed just for authorizing credit cards and may cost somewhere around $40 per month.
There are numerous merchant account and payment gateway providers. Each of them varies in terms of fees. Therefore, it is important to shop around for the best deal before signing an agreement for service. Also, be sure to read all the fine print of any contract.
The best Merchant Account provider is MerchantWarehouse. They have cheap fees and are very easy to use.
Best Merchant Accounts
