Merchant account fees are incredibly tricky to figure out and stay on top of since they are constantly changing and may not be the first thing on your mind if you are looking to save money but rest assured, if you are trying to save money for your bottom line, working on these fees may be the best option. Before you spend all of your free time researching these account fees, you should know a few essential things that will help you understand this system.
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Transaction fees
One of the biggest costs you will have to spend on the money you are making through virtual payments is due to credit card processing fees, which are charged by the payment processor in charge and the company that has issued the credit card, especially Visa or MasterCard. These fees are charged by tons of different companies because these companies all work together to ensure the customer in question is able to make a safe and secure payment using dozens of different platforms, all while ensuring the money gets into your account in one piece. These fees are tough to get around, especially if you receive tons of virtual payments, but depending on the bank involved, these fees can be reduced significantly.
Monthly fees
Another fee you may run into every now and then is the monthly fee that payment processors charge their clients from time to time. The basic idea here is that the payment processor you are working with needs a minimum value of money to be met each month, and this threshold is usually met by them taking a cut of the money you are making through each transaction. However, if you have had a slow month, the processor in charge will have to charge you an outright fee so that they can make their money back from maintaining and managing your account, so keeping the flow of money regular is a vital task.
Additional fees
There are far more fees, both hidden and visible, which may cause you to run into some issues as you’re trying to grow your business and get more customers. If you have an online platform and are receiving payments through the internet, you will run into a different payment fee, and there is a fee for not listening to or complying with the PCI or Payment Card Industry, too. If you mess up an order, or if the customer involved is unhappy with the experience you have provided and wants a refund, you will get charged a fee for the money your processor had to charge back for that customer.
Pricing models
Every transaction that you are getting will get a fee as all the companies involved try to get their cut, but depending on the type of payments you are getting, you can alleviate this by changing your pricing models. If you are less interested in the money you are spending on these fees, you could go for a fixed price model, which means you will pay the same amount for each transaction no matter how little or big it is. This loses money in the long run but is better for efficiency and simpler in most cases, if you want the most common option, you will have to do research and try to work your transactions to fit into different tiers, all of which have their own rate. Since you are going to be paying different amounts depending on the value of the payment you have gotten and the tier it fits into, you will likely be saving more money with time, but you could run into the risk of letting a payment slip and getting issues with the PCI, which, as previously mentioned, comes with its own fee.
Conclusion
Account fees are something you have to stay on top of and contain as much as possible if you are responsible for a business since each business relies on staying profitable and making more money than they are spending if it wants to stay afloat. Merchant fees may not be the biggest issue in your case, but it is something that reduces your bottom line, so if you are able to use the information in this article, reducing them wherever possible may be the best option for you.
