When you purchase something on a merchant account, the retailer has to pay for it. It is a typical financial structure for businesses that can be beneficial if your business succeeds. However, there are some expenses that you will incur when associating with merchants. These fees will be deducted from the sale to cover merchant service and fulfillment costs.
The online e-commerce stores are well aware of all of the fees associated with a merchant account as they have to add up all the costs when checking the status of their sales and how much profits they are achieving with each sale. Therefore, the article will address all the matters related to merchant account fees and how they are calculated.
Risk factors
One critical factor that specifies how much fee you will have to bear is your account’s risk factors. Suppose your activities are associated with riskier matters, such as being associated with the adult industry or the traveling industry. In that case, there is a greater chance your account will be labeled as a high-risk account which will endure higher fees on every transaction or activity. Other accounts linked with common business will have much fewer fees. This way, your business activities will directly impact merchant fees incurred on your account.
Some examples of fees charged by merchants include:
Chargeback fees are the fees incurred when a customer claims a chargeback. Additionally, the merchant charges high fees for accounts with frequent chargeback claims, as they are riskier.
Merchant service fee is chargeable by the merchant to provide customer support and answer their queries. Most merchants charge this fee for regular maintenance. These fees ensure that their services remain stable and the business associated with them is offered the best services possible.
Fee breakdown
Although you will find most of the fee information of a merchant account on their website, some fees are not always presented in terms of service or the contract. These are either charged as a one-time fix fee or whenever you opt to use a specific service. For instance, the rental fee for using the merchant’s credit card facility, the fees resulting from international transactions, and fees incurred by using applications are examples of fees incurred when a specific facility is being used.
Specific fixed fees will include the setup fee, which will be charged when you initially start using their services. Some common costs will consist of the monthly payments that must be paid for using their services, the per-transaction fee charged to every transaction, and other regular fees.
Understanding the purpose and reason behind every fee a merchant account holder has to bear on transactions is not always straightforward. It is because these fees change from account to account, depending on the nature of activities and the services used by your company. Try to communicate with the service provider to understand the exact nature of every fee incurred on your account and to inquire about the reason behind an unexpected charge on your transactions. Hopefully, this article has helped you understand the nature of merchant account fees and why certain accounts must bear excessive amounts.