You need to pay a number of fees for your merchant accounts out of which some are periodic and others are charged on percentage basis. Most of these fees are set by your merchant account provider but there are some of the services that are passed through the merchant account provider to the financial institution issuing credit card according to the interchange fees set up by Visa and MasterCard. The transaction fee depends on the mode of transaction.

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3-Tier Pricing:

The 3-Tier Pricing has divided the pricing into three units where different fees associated with the merchant accounts are charged. There is a specific criteria set for each tier:
• Qualified rate: any standard transaction that occurs at the merchant satisfying all the standard rules and regulations set up by the merchant account provider using a credit card processing solution.
• Mid-qualified rate: the mid qualified rate or partially qualified rate is applied when the credit card does not meet the minimum limit. In such a case, you will be charged the qualified rate plus the mid-qualified rate both on every transaction.
• Non-qualified rate: the non-qualified rate is the maximum of the tier. All the transaction that don’t fall in the qualified or mid-qualified transaction automatically fall under the non-qualified rate and merchants even charge markup on these transaction to save them their cost.

Interchange Plus:

There are some merchant accounts available that work on the “interchange plus” rules. There are interchange tables launched by Visa and MasterCard in form of Visa Interchange and MasterCard Interchange. You get to have discount rates by setting up additional costs.

Bill Backs:

This has been recently introduced into the merchant account world and has a number of variations involved. The basic principle is that all the interchange fees on the statement is paid by the merchant. This is tricky as you need to make a lot of research to get to the actual cost of every transaction.

Other fees:

There are a number of other fees associated with the merchant accounts. These are summarized below:

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• Authorization fee: This is charged when the transaction is sent to the issuing institution for authorization of information. This is known as transaction fee and per item fee as well.
• Statement fee: This is the fee that the merchant needs to pay for the statement that is received by then after every month. This shows all the transactions that took place in the month of the statement.
• Monthly Minimum Fee: This fee is mandatory every month and acts as the driving force for the merchant account providers defining nominal profits for their institution. These are generated from transaction and if that does not satisfy the level, the merchant is charged additional.
• Batch Fee: This fee is charged when every batch of transaction heads to the financial institution for payment. It is suggested to close each batch every 24 hours else there are higher rates charged by Visa or MasterCard.
• Annual Fee: This is charged every year by the merchant account provider as the cost for maintenance.

There are a number of more fees that the merchant account providers charge you for the services that they provide. These ones are perhaps the most important.

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