Merchant Account Notes

1. Terms of the Contract/Agreement:
Ask the salesperson and Read the Fine Print pages for the terms, 1year, 2 years, 3 years Contract/Agreements.
Ask the salesperson and Read the Fine Print what is the out clause if any (Termination Statement) Option: 30 days, 60 days, 90 days out?
What is the penalty for early cancellation?

Unfortunately, merchant services are not provided free of charge.
Do your homework and understand what fees will be charged by the Merchant Service Provider.
These fees include, but are not limited to:

Setup Fee:
Usually no fee, but some providers may charge between $50.00 or more.

Application Fee:
Usually no fee, but some providers may charge between $50.00 or more.

Monthly Statement Fees:
$10.00 to $12.50 Monthly Bank Statements.
The Monthly Statement will list all the transactions that occur during that particular month.
It’s like a Phone Bill and some time just as hard to understand.

Annual Fees:
$0.00 to $99.00 and up.
Merchant Account renewal fee on each year anniversary, but some will charge you 90 days out.
Read the Fine Print.

ChargeBack Fees:
$25.00 per instance.
ChargeBack occurs when the cardholder disputes a charge.
It usually happens when the cardholder gets their monthly credit card statement and don’t remember the purchase, don't recognize the business name or they didn't make the purchase.

Tip, Customer Service:
Make sure your Company/Business name is on every thing the customers see, including all e-mails - invoices – receipts - warranties. Having a business 800 number will help when the customer calls to ask about the charge. Without it, the customer may just call the bank's toll free 800 and dispute the charge.

Too many ChargeBacks will get you cancelled (TMF) or they may start a rolling reserve or hold backs.
This means that the bank will hold a selected percentage of every batch (5%-20%) until 33%-75% of monthly sales volume reserve is met. If they cancel you and your Black Listed (TMF) you may find it very hard to get another merchant account.
Call OnlineBob at 1-951-371-8733 to learn more about TMF!

Watch your ChargeBack’s!

2. Discount Rates:
Is the percentage charged to the business for every credit card sale completed?
There are 3 rates, Qualified, Mid-Qualified& Non-Qualified
1. Qualified is card present swipe rate, most retail stores – Brick and Mortar
2. Mid-Qualified, credit card not present, Mail Order Telephone Order – Internet
3. Non-Qualified, International Cards, Corporations Cards, MOTO charge failed AVS, and Batching after 24-48

Transaction Fees:
25¢ to 99¢ or more.
This fee is charged with every credit card transactions.
Sometimes there can be a different fee charged for each of the three Discount Rates.
25¢ Qualified, 25¢ Mid-Qualified, and 30¢ N-Qualified.
Often, processors will hide this transaction fee into the overall Discount Rate making it look like there is no transaction fees, but there is!

Monthly Minimum Fee:
The Monthly Minimum Fee is the minimum fee paid each month to the credit card company.
The fee is between $15.00 and $25.00.
This is usually for MOTO & Internet Accounts not so much for Retail accounts, although!

Example, Lets say that the Monthly Minimum is $25 and the merchant sell $1000 in goods/services over the month.
The accumulative amount from the Mid-Q Discount Rate would be (Mid-Q 2.49% of $1000) $24.90 for the month.
This amount does not meet the $25 minimum so the merchant pays an additional $.10 out of their pocket to meet the minimum.
The credit card company will charge you either the Minimum Fee($25 Dollars) or the cumulative Discount Rate charges, which is the greater of the two.

Bottom line if there no sales for the month the merchant is out of pocket $25 for the Monthly Minimum Fee.

3. Hidden Fees:
AVS Fees: Normally It's Free
Address Verification System, this is a security feature for "card not present" transactions.
It checks to see if the billing address given by customer matches their Credit Card Number.
Usually there are no fees, but the processor can charge you.
At a 15¢ cents per transaction fee you would be spending base on these credit card transactions:
30 transactions per month = $4.50 extra a month.
30 transactions per week = $19.35 extra a month.
30 transactions per day = $135.00 extra a month.

Batch Fees: Normally It's Free
The daily closeout of all credit card transactions is submitted to the Merchant Account Provider, either manually or auto, gateways are always auto.
Usually there no fees, but the processor can charge 5¢ to 50¢ per batch.
If they charge you 50¢ x 365 days a year that = $182.50 you're paying extra!

4. Hold Backs / Rolling Reserves:
A portion of the revenue from a merchant’s credit card transaction, held in reserve by the Merchant Account Provider to cover disputed charges, chargeback, fees, and other expenses.
After a predetermined time, holdbacks are released to the merchant.
Always ask if there will be any holdbacks, if so how much, and how long.