Credit Card Processing Experts - Credit Card Processing Fees : What's Hot, What's Not, And What Could Be Avoided -

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Credit Card Processing Fees : What's Hot, What's Not, And What Could Be Avoided

by Jane Fritzgerald   Let's get this straight. You are a merchant and have decided to accept payments through credit cards. Or if not, you plan to put up an Internet-based shop that will accept online credit card payments. To do this, you need a merchant account provider that could process your credit card payments. This processor will do all the nitty-gritty work for you. With it, you just have to sit back and watch as the payments are automatically deposited in your account. Of course, this convenience comes with a price. You have to pay the necessary fees. But be on guard. Some credit card processing company will make a killing out of your business by charging exorbitant fees. It is important that you exercise caution when shopping for credit card processors. Here' s a list of credit card processing fees, the best deals, and expenses to watch out for: <ol><li>SETUP FEE This is a one time basic expense. Setup fee among credit card processing providers ranges from $0 - $99. Any setup fee exceeding $100 is an overkill. Avoid them. Moreover,please know that there are companies which charge you setup fee up front. Some companies bundle it in the total solution purchase costs which you can pay at a later date. You can always negotiate. Any legitimate company that charges you $80 plus on setup fees is already a hot deal. Grab it. On the other hand, watch out for companies that offers setup fee below $50. They could be charging you high on other fees to make up for the low payment. </li><li>EQUIPMENT FEE /OR RENTAL Refers to the software or the hardware involve in the the credit card processing of your business. Examples are card readers and terminals. If you want to buy these equipments, it would cost $100-$300. The more sophisticated the equipment, the more will be costs. So shop around for the best deals. However, credit card processing companies will give you the option to lease their equipments. You will be paying an average $20 monthly for the lease of these hardware. But there's a catch to this arrangement. Too often, the contract will stipulate that you will continue to pay lease costs even though you already close shop. To avoid this hassle, I suggest you buy all the equipment. You will be saving a substantial amount in the long run. </li><li>PROGRAMMING FEE This is a one time fee and happens only when you change providers. If you stick with your chosen credit card processing the whole time, you need not worry about this cost. Still, it pays to be cautious. If you ever change providers, programming fee ranges $0-$99. If you can negotiate the cost down to $25, consider yourself lucky for striking a hot deal. </li><li>DISCOUNT RATE This is a small percentage amount deducted from the purchase cost. Ranges from 1.5% -- 5%. This is a fixed charge, mind you. Usually, the discount rate depends on the risks involved in your business. Established businesses pay a lower discount rate compared to online businesses. For a really hot deal, try to haggle for an average of 2% discount rate. </li><li>TRANSACTION FEE Again, this is a small amount deduction from every purchase cost. Ranges from $0.10--$0.60. Anything between $0.15- $0.25 is a hot deal. </li><li>MONTHLY MINIMUM FEE The amount is based on your total discount rate and transaction fees from card sales in a given month. You pay a small minimum fee if you meet your bank's quota for your expected monthly sales. If you fall below their established quota, you suffer stiffer monthly fees. Ranges from $0-$30 per month. </li><li>GATEWAY ACCESS FEE Your gateway processor is different from your credit card processing provider. You pay the gateway processor for accessing their services. Secure gateway providers fees range from ).$5-$15 each month. </li><li>STATEMENT FEE Each month, your processing bank will send you a statement of all your transactions for that period. Much like a water bill or an electricity bill. You pay the bank for this service. Usually costs around $ 20, give or take a couple of bucks. If you have been prompt with all your pertinent bank charges, you can negotiate for a free statement bill. It's up to you and to the processing bank, really. </li><li>ADDRESS VERIFICATION SERVICE ( AVS) This is an additional service that carries additional cost. AVS offers added guarantee against credit card fraud. The fee usually comes at an average of $0.05 per transaction. </li><li>CHARGEBACK FEE Every time your customer disputes a card transaction, a corresponding amount is deducted from your account. It ranges from $5-$30 per charge back instance. </li><li> RESERVE FUND Usually based on your expected sales receipts. This is an amount allocated to cover the cost of any chargeback. The amount varies with every card processing company. So be diligent in shopping for a company that requires lower reserve fee. </li><li>ANNUAL FEE Some card processing company charge you with the maintenance of their equipment in your establishments as well as the upgrading any software you are using. Again, haggle for a hot deal on this one. If you have the power of gentle persuasion, the company can even waive this fee. </li></ol> OTHER FEES TO WATCH OUT ( FEES TO AVOID) Some credit card processing charge you with following superfluous fees. Some don't. So be alert and watch out for these unnecessary fees: <ol><li>FOREIGN CARD SURCHARGE FEE </li><li>CARD TERMINAL SWIPE FEE </li><li>DEBIT FEE </li><li>GATEWAY FEE </li><li>TERMINATION FEE </li><li>DAILY CLOSE OUT FEE </li><li>RETRIEVAL FEE </li><li>PASS-THROUGH FEE </li><li>LICENSING FEE </li><li>SOFTWARE FEE </li></ol> Don't settle for the first credit card processing company that knocks on your door. Take your time and shop around. It will take some time but it's worth the effort. You will soon find a credit card processing company that suits your needs and your budget. If you do, consider it a rare find. After all, that's what I call a real hot deal! ( Jane Fritzgerald owns a string of prestigious offline and online shops. She shares her business experiences by giving lectures on the different aspect of business management, particularly credit card processing procedures. She has also written several excellent books on various business topics.)  <a href="http://www.onlywire.com/submit?u=http://www.creditcardprocessingexperts.com/credit_card_processing_fees_what" target="_blank" title="Add this Article to Onlywire"><img src="http://www.onlywire.com/i/onlywire.ico" alt="" />Add to Onlywire!</a>

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