MERCHANT ACCOUNTS FEE STRUCTURE

The structure of the fee composes the actual working of the merchant account. The merchant accounts fee structure is determined by the choice of the merchant account holder according to the type of their business. In the past, the merchants or the customers were charged the customer service fee. However, in the modern banking era, this system has been eliminated. There are various fees that are charged by the banks or the merchant account providers. The fees are charged for various different services that are given by the banks and the merchant account holders to the customers. There is a fee called authorisation fee which is charged for every transaction which is sent to the credit card issuing company for authorisation. This fee is charged once the merchant account is approved for the applicant. It is also different than the transaction fee and per product or item fee. There is also annual fee which is charged to the merchant account holder. It is in the form of revenue to the issuing bank. The fee ranges between $ 49 and $ 399. It is charged against the overall maintenance cost of the merchant account. In some cases, some merchants withdraw their account or end the contract before the expiry of the term. Early termination fee is charged to the merchant account holder doing such. The normal time period for a contract is from 1 to 3 years and can be extended up to 5 years. The fee is charged to secure the risk of loss of the bank.

There is another fee which is charged to the merchant account holder for providing the monthly statement. This fee is charged at the end of the month. The statement shows every transaction detail which was done during the whole month. The fee is directly deducted from the merchant’s bank account. The merchant is also charged a monthly fee which is fixed. In other words, a merchant account holder has to pay a fixed amount on monthly basis. This is a type of maintenance fee which the bank collects for updating the statement and overall account management. This is a cycle of payment which is for the merchant account holder. It is fixed according to the agreement that is made between the merchant account holder and the bank.

A merchant may not have sales in a month but this monthly minimum fee has to be paid at the end of every month. The merchant account holder also deals in batch processing of the credit cards. At the end of the day, the merchant sends the transaction made during the day to the bank for payment. It can be done manually and also automatically. Large scale merchandise businesses have automated payment systems. This is called batch fee. In order to maintain a perfect balance in the merchant account, a merchant has to send across the transactions details to the bank within 24 hours of the POS (Point of Sale). This fee was charged by the banks in order to meet up for the expenses and costs to maintain the customer service department.