Do keep in mind, however, that cost isn't the only factor, and cheapest isn't always best. Your ultimate goal is to find a merchant account provider that offers the features and services you require at the most reasonable price possible. Because a merchant account is largely a relationship of trust, the cost of your merchant account will vary based on the amount of risk the merchant bank feels they are assuming by accepting your business. Internet, mail and phone-based businesses usually pay higher fees than traditional businesses, because they pose a greater risk for fraud. Also, higher fees are charged for higher transaction amounts, because these transactions also represent a great risk for loss. With this in mind, we'll list some of the most common costs related to opening and maintaining a merchant account.

Standard Fees

Application/Setup Fee - One-time cost to begin your service, ranging anywhere from $0 to several hundred dollars.

Discount Rate - A percentage charged for each transaction amount. Varies widely, but rate averages around 2.35% for internet/mail/phone accounts and around 1.59-1.89% for retail transactions.

Transaction Fee - Fee charged for the network and computers required to process a transaction. Usually from $0.20 to $0.50 per transaction.

Statement Fee - Cost for receiving a monthly statement. Usually about $10 per month.

Monthly Minimum Fee - Minimum amount you will be charged each month by your Merchant Provider. Usually around $25-$30.

Additional Fees Gateway Fee Swipe Terminal Hardware/Equipment Costs (purchase or lease) Programming Fee Batch Fee/Daily Close-out Fee Chargeback Fee Annual Fee Reserve Fund Termination/Cancellation Fees Foreign Card surcharges Debit fees

A Few Questions to Consider Regarding Costs

How long before money is deposited into my account? It takes most companies at least 48 hours to deposit funds into your account, and some companies may take 3 to 5 days or more to deposit your money. Be wary of companies who claim they can get it to you in less than two days, or who take two weeks or more to get you your money.

Will fees be deducted before depositing money into my account, or at the end of each month? Transaction fees and discount rates are generally deducted before any money is deposited in your account. Additional merchant fees (batch fees, gateway fees, etc.) may be deducted daily or at the end of each month. Find out which method your provider uses, and whether they'll let you choose how you'd like to do it.

Are my rates/fees fixed or introductory? Some companies offer great introductory rates in the beginning, then slowly increase your fees. Make sure the rates they quote are fixed, not introductory.

Are my rates/fees guaranteed not to increase, and for how long? Most companies "guarantee" your fees will not increase through the term of your contract. However, if Visa and MasterCard raise interchange rates for service providers, service providers will probably pass along the costs by raising your rates as well.

Is the merchant provider willing to put all of their fees in writing? Merchant providers should offer a complete disclosure of all rates and fees you will be charged. Even "hidden fees" not mentioned elsewhere in ads and other information should be completely detailed in your contract. There's no excuse for hiding this information from you.

Is there a maximum transaction amount per month? This may be a real concern for non-traditional retail businesses, such as internet companies. Because of increased risk inherent in larger dollar amounts, some merchant account providers will freeze your funds if you exceed a certain transaction amount per month. Most providers limit your transaction amounts to less than $10,000 a month. This may cause major problems for fast-growing businesses - make sure the services you sign up for will meet your needs for the long term.