GLOSSARY TERMS

When it comes to deciding on a merchant account – and on a merchant account provider – one of the most important considerations is cost. Sure, cost should not be the only thing you consider when choosing a merchant account, but it is very important. After all, you are a business. The idea is to make a profit. High cost merchant accounts can result in lower profits. So cost is a factor.

Another way to look at cost is to take it beyond simple numbers. Think of cost in terms of value as well. It’s not just paying the smallest amount. Really, your consideration of cost should take into account what you are getting for your money. Are you getting good customer service? Are you getting another feature that you need in a merchant account? These are additional factors that you should consider when thinking about cost. You do not want just the cheapest service; you want the best value.

Things to consider when considering value include:

· Customer service.
· Addresses issues in a timely manner.
· Professional and friendly.
· Offers the features that you need.
· Flexible.

Not all of the items listed above may not be tangible things, but paying a little more for them might make sense, depending on your needs – as long as you are getting a higher level of quality.

But, even though these things are important, they do not erase the overarching importance of cost. It is important to consider the following when making a decision that includes cost:

Standard fees

There are many standard fees that merchant accounts charge. And while these fees may be standard with most merchant account providers, it is true that some may charge less than others. Here are some of the standard fees you can expect to pay:

Discount rate: The fee charged as a percentage of each transaction.
Transaction fee: This is a fee that is charged for the network of digital information processing. This is sometimes added to the discount rate for a total per-transaction fee, usually around 3% of each transaction.
Setup fee: Most merchant account providers charge a fee for setting up the account. If you are switching to a new provider, a programming fee, to reprogram you swipe terminal, may be charge as well.
Monthly fees: These are fees that are charged each month, such as a statement fee or a minimum.

Other fees

In addition to fees that are fairly standard, you may find optional fees charged by some merchant account providers. These fees include such items as:

· Gateway fees.
· Debit pin pad fees.
· Surcharge for foreign transaction.
· Chargeback fee.
· Reserve fund requirement.
· Cancellation fee.

Compare the fees and rates charged by different merchant account providers in order to get a better idea of costs.

Other cost considerations

There are some other things regarding cost that you should consider when setting up a merchant account. Here are some of them:

When funds become available. Most of the time, it will take about two days in order for funds to be deposited into your account and available to you. The average is about three to five days. You can avoid costs down the road if you are wary of companies that take longer than two weeks to make funds available, or companies that promise to have tge money to you sooner than 48 hours.

Is there a charge for funds deposit? Some merchant account providers charge fees for deposits and other transactions. Check on this before committing.

Are rates and fees fixed? Find out whether or not the rates and fees you are quoted are fixed or not. Some merchants offer a low discount rate, or waive certain fees at the beginning in order to “reel you in.” After a few months (but before the contract is up), the rates and fees reset. Find out if you can get a fee or rate guaranty in writing.

Get fee schedules and rates in writing from the merchant account provider. Insist that the merchant account provider give the rates and fees they charge – all of them – in writing. You can use this list for comparison. If a provider offers to waive a fee, make sure you get that in writing as well – before you sign a contract.

You can limit your costs if you shop around, looking for a trustworthy merchant account provider.