Fees for Electronic Payment Processing

Electronic payment processing gives you the opportunity to expand payment options for your customers, therefore giving you the opportunity to increase your sales. However, there are fees associated with offering electronic payments and those fees are usually different from the fees for traditional, card-present payment processing. Before you offer this service, make sure you understand what the cost will be to your company.

A Breakdown of Electronic Payment Fees
If you already have a merchant account for credit card processing via a physical terminal, then you may already be familiar with all of the different types of fees that you have to pay to maintain such an account. Here is a breakdown of those fees as they relate to electronic payment processing and how they differ from traditional fees.

The Discount Rate
The discount rate is a percentage of each transaction that you are charged by the merchant account provider. This rate is typically higher for electronic payments because merchant account providers consider it a higher risk. The reason for that higher risk is because you, as the merchant, never actually get to see the card. Also, additional information about the credit card is usually required, such as an address associated with the credit card account, to verify the card number. If that verification information is not included on a transaction, you may end up paying a surcharge. Be sure to ask your merchant account provider about verification requirements and all additional surcharges so you don’t end up with any surprise expenses.

Per Transaction Flat Fees
In addition to the discount rate, you will have to pay the per transaction flat rate. This rate may or may not be more for each payment that is processed electronically, so check with your merchant account provider.

Monthly Fees and Minimums
As with any type of merchant account, you will be expected to pay a monthly maintenance fee. You may also half to reach a monthly minimum through your transaction fees. If you don’t reach that minimum, then you will be charged a monthly minimum fee on top of your maintenance fee.

Other Electronic Payment Processing Fees
Don’t forget about other fees that may not appear as a monthly charge on your bill. If you don’t currently have a merchant account, you will have to apply for and open one. This may involve application and setup fees, but don’t be afraid to ask the merchant account provider to waive those fees. You may be able to save money if the company says yes. Also, you will need software, known as a virtual terminal, to be able to process electronic payments with your merchant account provider. If your provider doesn’t offer you a software package with your account, include the cost of new software in your budget.