Understand Merchant Account Fees

Fees. Fees. Fees. This is how ISOs make their money back. Before signing on with someone, you should be clear about what they’re charging. This means reading the fine print in your service agreement. Keep in mind that different fees will have a different bearing on your total cost depending on what the volume of your credit card transactions, the size of each transaction, whether you have card-present transactions, and other aspects of your business.

Discount Rate: A percentage of each transaction, anywhere from 1% to 3%, on average; includes Qualified, Mid-qualified, and Non-qualified Rates. Discount rates vary based on method of payment. Expect to pay higher rates in the following order, where debit cards offer the lowest rate:

1. Debit cards
2. Diner’s Club
3. Visa/MasterCard
4. Discover Card
5. American Express

Frank Ross, our home-based business expert, explains, “Debit Cards will only give you a lower rate if you accept them as debit cards. Since they are usually Visa/MasterCard Debit cards, you can swipe them as credit cards, but will get Visa/MasterCard discount rate if you do so. You will generally only get the advantageous discount rate if you use them in a debit card enabled device or system, like a PIN pad device.”