What are merchant fees for credit cards?

merchant credit card feesMerchant fees for credit cards are the costs that the merchant has to pay for accepting credit cards as payment instead of cash or check. Most consumers don’t think about the fact that their convenience of using a card costs the merchant money. Each time your credit card is swiped, multiple fees may result for the merchant.

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When you look at each fee individually, it doesn’t seem like very much. However, when you add all of them up from multiple cards, the merchant fees can take up a sizable chunk of overhead. If you are a merchant, there are multiple companies and some will charge less than others will. If you do your research, you can find ways to reduce the number and types of fees that you pay.

Merchants Say Fees are Worth It

Although some merchant fees may seem high, most merchants would say that they are worth it. The majority of people use debit or credit cards to make purchases. In fact, most stores and restaurants do not even accept checks anymore so cash or credit is the only accepted form of payment.

If merchants decided to stop accepting credit or debit cards, the chance that they would lose a lot of business is very likely.

In the end, it would be a big mistake financially to stop accepting cards for payment. When you consider that, the merchant fees are usually worth it to keep customers coming in.

Types of Merchant Fees

The first fee to consider is for the credit card machine itself. It can cost hundreds of dollars to purchase one outright. Some merchants choose to rent or lease a credit card machine, which equals a monthly payment every month.

Once you have the credit card processing machine, you need to use a merchant services company to manage your credit card payments and fees. Oftentimes they will charge you an initial set up fee to get your machine and account started. The other types of fees are standard across the board, although the amount of the fees can vary from company to company.

Transaction fees are charged each time you run a card. It is usually a flat fee and can be anywhere from five to fifty cents per transaction. If you run many card transactions daily, this fee can add up quickly.

The discount rate is usually a percentage charged for each transaction. The discount rate varies depending on if it is a MasterCard, Visa, American Express, Discover, or other type of card. It also varies whether you swipe the card or type in the number.

merchant fees for credit cardsSome companies will charge a flat fee every month just as a statement or service fee. Others may charge you if you use address verification, which is used in order to cut down on credit card fraud.

The legislation involving merchant fees can vary and change from state to state and can change every year. For more information about current legislation in your state, visit the National Conference of State Legislatures.

Ways to Reduce Your Fees

If you are a merchant and are tired of paying high monthly fees to your credit card processor, you may be able to reduce the amount of fees by doing a little research. There are many merchant service companies out there and they are all trying to compete for your business so it may be worth comparing a number of them to see if you can save money.

If you are just starting out, one of the ways you may be able to save money is in regards to your credit card machine. Often companies will negotiate a cheaper price for a machine if you ask for it. You can also shop around for a used machine for a lot less money. Also, try to negotiate the set up fee.

If you are already in business and you feel that your merchant fees are high, contact a couple other processing companies and ask them to review your statements. They will compare your current company’s rates and fees with their own and let you know if they can save you money.

When you sign up with a company, ask if there is any contract. Some companies will require you to stay with them for a certain period of time before being able to switch companies. Do your best to sign up with a company that has no penalty fees for breaking a contract.

Keep in mind that the Federal Reserve sets maximum fees that the processing companies can charge. Make sure that the fees your statements list stay within those regulated limits.

Learn more about credit card fees with the FREE credit card chaser today!

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!