FINALLY, A GUIDE TO UNDERSTANDING ALL THOSE RATES AND FEES ASSOCIATED WITH CREDIT CARD PROCESSING     

These are the typical fees that you will see associated with a merchant account.  Rates and fees vary from one processor to the next.  Some even offer the lowest merchant account pricing around and even back it up with a guarantee.  Below is some great information to help educate the merchant with the rates and fees typically charged while processing credit cards.

Application Fee:   All providers have an application fee.  Some will charge it with the equipment lease or purchase, or add it to some other fee, sometimes called the setup fee, installation fee, etc.
*This is a one time fee ranging from $0 - $195.00

Software/Hardware purchase or lease: Software or equipment is required for processing in today’s ever changing environment.  Experts predict that soon we will be a cashless society and all transactions will be done electronically.
*Costs for purchase really vary depending on equipment.  Leases range from $29 for basic to $149 for advanced per mo.

Programming Fee:  This usually only applies to merchants that change from one processor to another.  The whole process is not that difficult so be careful not to pay too high of a fee.  This fee is sometimes used to try to make up for not selling or leasing equipment, so if you use your own equipment beware.
*Usually a $0 to $99 fee

Discount Rate:  The fixed percentage amount that 1s deducted from the purchase cost.  Lower discount rates are for retail merchants while higher rates are charged to phone/telephone order (MOTO) and internet-based businesses.  The risk factor is what determines the rate, when the card is not present there is a much greater chance of fraud.
*Rates vary from 1.49% to 5.00% depending on the risk factor.

Transaction Fee:  In addition to the discount rate a transaction fee is also deducted from the purchase cost.  Also just like discount rates the fees are also based on risk.
*Fees normally range from $.20 - $.50 per transaction 

Monthly Minimum:  This fee is based on the transaction and discount rate fees from your credit card sales each month.  If your monthly fees charged for that month do not meet the minimum then you would be charged the difference.  Not all processors have monthly minimums, however almost all do.
*normally between $0 - $35 per month

Gateway Access: Since in most cases, the secure payment gateway provider such as Verisign, one of the most popular, is a separate company from the processor and they collect extra fees.  For every month that you are on their system, you pay an access fee.
*Fees range from $0 - $50

Statement Fee:  At the end of each month you will receive a statement from your processing bank that will list all the transactions that cleared for the previous month.  It is very similar to your phone bill.
*Ranges from $0 - $25 per month

Daily Closeout Fee:  Associated with software and terminal processing solutions where at the end of every business day you close-out all your transactions.
*Normally $0 - $.25 per day

Address Verification System (AVS):  This service checks to see if the billing address given by the customer matches the credit card. 
*Normally $0 but some processors charge $.05

Chargeback:  A chargeback occurs when the cardholder disputes a charge on their statement.  A large number of chargebacks can result in your merchant account to be dropped totally and put on a list.  It may not be possible to get another merchant account for years after this happens, if possible at all.
*Range from $5 - $25 per chargeback

Reserve:  Some processors may require to set up a reserve account where the amount is determined by your businesses estimated sales receipts.  Businesses that do a high volume of sales each month may be charged a reserve fee. 
*Normally there is no reserve fee and should be avoided if all possible.

Annual Fee:  Most credit card processors will charge a fee once or even twice a year to help absorb the cost of maintenance and system upgrades.  This fee may not always be disclosed upfront, make sure to ask your merchant account representative about this fee.
*Annual fee range $0 - $195, Semi annual fee range $0 - $99

One thing that has been overlooked in the past with the credit card processor or provider is the full disclosure of all rates and fees.  Although the processing industry in whole is forever changing, we would like to recommend that you find one that believes in full disclosure of all rates and fees, and is very customer service driven.

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