Q: I'm starting a new business and want to accept credit cards. 
It seems that all the credit card processors charge a lot of fees 
for each transaction. What are these fees?

A: Each credit card processing company operates somewhat 
differently, but there are a number of fees that are common to 
all of them. Here are some examples of various fees associated 
with a typical merchant account.

The Application or Setup Fee is a one-time charge for processing 
a merchant application and activating your new merchant account. 
Some processors waive this fee to promote their businesses and 
attract new merchant accounts.

The Address Verification Service Fee (AVS) is a fraud prevention 
measure that provides merchants with an additional fraud-
detection tool to determine the validity of a sale, which is 
especially useful when the card is not present. AVS matches a 
sale's shipping information with the cardholder's billing 
address. When addresses do not match, merchants should discuss 
the discrepancies with their customers before shipping orders. 
AVS only works with cards that are issued in the United States. 
When AVS is used, there is a per-transaction fee for the service.

The Discount Rate is the percentage charged on the dollar amount 
of a sale or a returned transaction. Discount rates vary 
depending on the type of business, such as a traditional brick-
and-mortar business, a mail-order/telephone-order business, a 
restaurant or an e-business. Discount rates also vary depending 
on whether a card number is keyed into the point-of-sale terminal 
or swiped into the terminal. Swiped rates are generally lower 
because of the data encoded on the card's magnetic stripe, which 
eliminates key-entry errors.

The Secure Payment Gateway Fee is a charge assessed to e-commerce 
merchants to enable them to process transactions securely over 
the Internet. This is usually a monthly fee.

The Customer Support Fee is a monthly charge assessed by some 
processors, which enables them to provide high-quality customer 
service 24 hours a day, 365 days a year, often in multiple 
languages and dialects.

The Monthly Minimum Fee is charged to the merchant if the total 
monthly discount rate amount for MasterCard and Visa transactions 
does not reach a minimum threshold. If the merchant reaches the 
minimum threshold, no monthly minimum is charged. Virtually all 
credit card processors initiate this fee, and generally it ranges 
from $10 to $30 per month.

The Reprogramming Fee is a one-time charge a processor may assess 
for converting a merchant from one credit card processor to a new 
credit card processor.

The Transaction Fee is assessed for each transaction 
authorization submitted by a merchant, such as a sale or a 
return. This fee is also charged on transactions where the card 
is declined. In addition, transaction fees are incurred for 
American Express and Discover card transactions.

Equipment and Software Fees vary depending on the type of 
business-traditional brick-and-mortar, mail order/telephone 
order, restaurant or e-business. Merchants will need certain 
kinds of equipment and software in order to process credit cards, 
debit cards and checks. Equipment can include point-of-sale 
terminals-both countertop and wireless-printers and PIN pads as 
well as secure payment gateways, virtual products, software and 
payment options for Internet businesses. Most equipment and 
software can be either purchased or leased, and prices vary 
depending on the processor.

Chargeback and Retrieval Fees: Chargeback fees for a disputed 
transaction are based on the number of chargebacks posted to an 
individual account ($10 to $25 per final posting). Incoming 
retrievals are requests for the original transaction receipt that 
the cardholder's bank requests and are charged whether or not 
there is a final posting. The industry standard is $15 per 
incoming retrieval.

Keep in mind, there are numerous considerations to maintaining an 
effective merchant account, and fees are just one component. When 
you open a merchant account, ask your credit card processor, 
agent or sales representative to explain all your prospective 
rates. Be sure to ask if the transaction processing company has 
revealed all charges that could apply to your account; you want 
to avoid any hidden charges. Look for a credit card processor 
with a reputation for being honest and upfront, whose merchants 
are fully informed of what is reflected on their monthly 
statements.

Sometimes merchants shop for discount rates, but rates are only 
part of the processing picture. Look for a credit card processor 
that consistently provides top-quality customer service, 24-hour 
availability and a one-stop shopping experience (i.e., point-of-
sale equipment, processing software, training, 24/7 customer 
service in more than one language and state-of-the-art fraud 
prevention procedures).

Credit card processing does not have to be intimidating or 
challenging. Find a processor dedicated to personal interaction 
with its merchants. Work with agents and sales representatives 
who communicate directly and honestly with their merchants, 
explaining each charge and what it covers. Ask questions. 
Remember, you are the customer. Accepting credit cards can help 
grow your business.

For additional information click over to: 
http://www.cmscreditcards.com
 

Scott Burke; President of iMAX Business Solutions in charge 
of sales, strategy, and execution and thus is responsible for 
managing all aspects of the company's marketing, communications, 
new accounts, and support. scott@cmscreditcards.com
http://www.cmscreditcards.com/