5 Payment Processing Fees You May Not Know Your Business Is Paying

Since 2000, it has become an expectation for small businesses to accept payment from customers in the form of credit card or debit card. There are many merchant companies that assist small businesses with processing credit card payments. These merchant companies are considered the “middle man” in business transactions because they work between the business owner and the bank to collect payment from the customer. But with “middlemen” come convenience fees some larger or more obvious than others. At one time, there were only a few merchant companies available for small businesses to process credit card payments — the lack of options made these fees almost unavoidable, but today there are alternatives.

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So what are these fees, and how can you avoid them?

Monthly Statement Fees

Many merchant processing companies will charge a fee for monthly statements that list the monthly credit card transactions of the business. This fee is charged at the end of the month and ranges from $8.00 to $15.00 per month. It is also frequently undisclosed when the contract is presented.

But do not fret, here are a few tricks that small businesses can use to avoid the monthly statement fee. First, the customer can ask that their monthly statements be emailed to them, instead of being sent through traditional mail. Second, the small business can access their monthly statements on the merchant company website, rather than relying on any other form of statement. Lastly, the small business can negotiate that they are not charged the monthly statement fee before signing the contract with the merchant company. Many merchant processing companies are starting to offer their customers bundle packages that waive the fee.

Monthly Minimum Fees

The monthly minimum fees are charged to the customer when their business fails to reach a certain quota in credit sales for the month. For example, the merchant contract may require the business owner to make at least $500 in credit sales per month. If the business does not meet the sales quota for the month they are required to pay a fee that ranges from $25 to $45 per month. This type of monthly fee can be a financial hardship on a small business that is starting out.

Newer merchant processing companies are getting rid of the monthly minimum fees because they understand that business transactions fluctuate on a regular basis. It is good for a small business owner to do their homework when shopping for a good merchant company. They would want to ensure that the monthly minimum fees are low or non-existent.

Gateway Fees

Gateway fees are operating costs charged by the companies that handle the processing of financial data for credit card payments. These companies charge this fee when the customer uses the internet for credit card payments or uses a credit card processing terminal. These fees usually range from $10 to $30 per month, with a one-time setup fee of $150.

With the added competition of newer merchant companies, gateway fees are becoming less common or are replaced entirely by the setup fee. Many merchant carriers also offer bundle packages where the business owner will pay one monthly fee to cover several credit card processing fees.

Transaction Fees

Some merchant processing companies will charge the small business owner a fee for every transaction that goes through. These fees can range from 0.5% to 25% per transaction that gets approved and processed plus a fee of 20 cents or 30 cents for each one. This is a major reason why some small businesses have only started to take credit cards in recent years.

With newer processing services like FattMerchant, the transaction fees are no more than 25 cents per processed transaction. Also, customers can be picky when choosing a merchant process company by demanding that the transaction fees be a certain amount. Merchant processing companies are starting to set the transaction fees at a more affordable fixed rate.

Mobile and Internet Processing Fees

Some merchant processing companies charge a fee to customers for accepting credit card payments online or by mobile phone. These fees are new in the merchant processing world and tend to be between $10 and $30 per month. Depending on the business model, this can add up quickly.

With more and more people doing business online, this fee is also beginning to become less common. Many small businesses do much of their business online, so many owners and operators have started to demand more reasonable rates from their merchant servicers.

Many small businesses can increase their monthly sales by accepting credit card and debit card payments by terminal, internet, and mobile phone. But, when choosing a merchant processing servicer the customer must take into consideration the monthly fees that come along with the services. It is important for the small business to ask the merchant servicer what fees they charge and read the fine print of the contract. Merchant companies are starting to see the importance of saving customers money when it comes to accepting credit or debit card payments.

Lautaro Martinez is a freelance writer and professional student who offers articles and advice on a variety of issues faced by the business community and small business owner.