What Merchant Account Fees Are and How to Lower Them

What Merchant Account Fees Are and How to Lower Them

One kind of business bank account that enables you to take credit cards over the phone or in person is a merchant account. Some companies would struggle to survive without one, particularly those with monthly sales volume of more than $10,000.However, having a merchant account might seriously reduce your profit margins because of the additional monthly merchant account fees and credit card processing costs.Thankfully, there are other options than creating your own merchant account if you want to take credit card payments. By implementing a surcharge scheme, we'll show you how to reduce your merchant account costs and even completely eliminate credit card processing expenses.

A Merchant Account: What Is It?

You could already have a business bank account as a small company owner, which you use to keep your funds secure and pay expenses. Most likely, however, it isn't configured to accept credit card payments. This is due to the fact that credit card transactions need a certain kind of company account and follow a different procedure than check or cash deposits.To put it simply, accepting credit card payments requires a different bank account known as a merchant account, which has associated costs.Banks that acquire merchant accounts provide them, and opening an account usually involves a drawn-out application procedure. For small company owners, this may make merchant accounts costly and unpleasant, particularly if your sales volume isn't big enough to warrant the monthly charge.However, there are methods to take payments with credit cards without having a merchant account. One such approach is to collaborate with a merchant services company like Nadapayments.

How Do Online Stores Operate?

To help you grasp the benefits and drawbacks of merchant accounts, let's look at how they operate before moving on to the best alternatives.A merchant account's primary function is to get your customers' payments into your company's bank account, however this is a multi-step procedure.The credit card company for your client will first authorize the purchase and deposit the funds into the merchant account.The transaction costs will then be subtracted by the acquiring bank, credit card processor, and/or credit card network, such Visa or Mastercard. They may furthermore contain markups in addition to being based on the current exchange rate.Ultimately, the funds are sent into your company's bank account, which you and your staff may access.

What Is The Duration of Transactions?

It may just take a few minutes to swipe a customer's credit card and get in contact with the issuing bank, but it may take several business days for the money to appear in your bank account.That some small companies decide not to take credit cards at all is not surprising given the number of processes needed and the possibility of chargebacks and delays.However, declining to take credit cards might lose you clients as they get used to expecting an increasing number of payment choices, such as contactless and smartphone payments.It is your responsibility to determine if merchant account fees are worthwhile and whether working with a merchant services provider to handle the merchant account will lower those costs.

What Is The Cost Of A Merchant Account Fee?

You'll need to speak with your acquiring bank to see which of the several kind of merchant account fees apply to your company.Generally speaking, there are two kinds of costs to be aware of: transaction fees, which might be imposed by the credit card networks such as American Express or Discover, or the payment processing business. Account fees are levied directly by the acquiring bank.Any of the following fees might be assessed by your bank:

An initial setup charge when opening a merchant account (which does not cover the price of a point-of-sale (POS) system or card reader)

Fees for monthly or yearly accounts; often, a fixed charge of $10 to $30

Statement fees pay for the expense of receiving credit card statements by mail.

a lump sum charge for handling lots of transactions

A payment gateway cost for e-commerce services, or an address verification fee for customers' addresses

An early termination or cancellation charge in the event that you end your contract early

While not all of these merchant account fees will apply to you, it might be difficult to anticipate them in advance since merchant service agreements are often quote-based.Every transaction will additionally incur a credit card processing fee, which is typically determined by one of three pricing models:

Fixed-rate pricing

Interchange-plus pricing includes a markup in addition to the real-time interchange fees levied by the main credit card networks.

various rates apply to various sorts of transactions, such as high-risk vs card-present payments, under the concept of tiered pricing.

Depending on the kind of cards you accept and your sales volume, you may choose the one that would save you the most money. For instance, flat-rate pricing might add up rapidly if you execute a lot of purchases with little transaction amounts, but it does tend to be more predictable.

How to Prevent Fees on Merchant Accounts

You can be paying credit card processing costs in addition to merchant account fees, as was previously noted. You have two choices for lowering or doing away with merchant account fees: Nadapayments or a payment services provider. Credit card processing costs may be eliminated using one of these methods (more on that later).Since payment services providers do not have the monthly minimum costs associated with merchant accounts, they may be a more cost-effective option for companies accepting credit card payments that do not have a significant monthly sales volume.

You won't be required to pay an annual fee or any other extra costs in order to keep your account open; instead, you'll still be required to pay a flat price or percentage for each transaction. For instance, PayPal levies a fee for each transaction, charging various amounts for keyed-in, online, and card-present purchases.In contrast, Nadapayments applies a flat price to all credit card transactions, irrespective of the mode of payment, and then charges the client for those costs. As a result, you won't have to pay for credit card processing or merchant fees.

There are no startup costs or yearly account fees when you set up a surcharge program with Nadapayments; the only cost is the $35 monthly rental price for a Wi-Fi connected credit card terminal. When using a credit card, your customers will be charged an additional 3.5%, and you will not be charged any costs. Customers who use debit cards to make payments will only owe you 1% + $0.25 per transaction.Nearly all 50 states allow credit card surcharge schemes, and Nadapayments will provide the signs to ensure that your clients are completely aware of the rules around credit card processing. Your consumers may simply choose to use an other payment method, such as cash, cheque, or debit card, if they prefer not to incur a fee.

Additionally, because Nadapayments will handle all the paperwork, you won't need to register a merchant account yourself. It is now simpler to rapidly set up as a result.You'll also get free access to a mobile app and virtual terminal in addition to the credit card terminal, which will allow you to accept payments online, over the phone, and while on the move.Although payment service providers may assist you in avoiding merchant account costs, only Nadapayments has the ability to do away with credit card processing fees in addition to merchant account fees.

Choose Nadapayments as Your Supplier for Merchant Services

The cost of operating a company may increase significantly with the opening of a merchant account, including setup, account, and statement costs. Nadapayments might be your best option for payment processing if you want to begin taking credit card payments without having to pay merchant account fees.Small companies may easily take credit cards with Nadapayments without having to deal with the headache of opening a merchant account and paying associated fees. Enroll now to pay nothing for any credit card purchases!

2024's lowest credit card processing costs for small businesses

For businesses, accepting credit card payments may be quite beneficial. Nevertheless, a Nilson Report from 2022 states that card processing costs cost US businesses $160.70 billion. Your company might save money by comparing the prices offered by different payment service providers. The top low-cost credit card processing providers provide clear pricing and volume-based discounts.

By examining the credit card processing costs for in-person, mobile, and online transactions, we assessed the performance of many credit card processors. More than twenty hours of user feedback research and customer care agent interaction went into our review. We searched for hidden costs and compared interchange plus pricing to flat rate pricing. We also spoke to experts to find out how small companies may bargain with their merchant account provider to have rates down and processing costs lowered.