Accepting Credit Cards
Terms You Need To Know
There are many factors that go into setting the rate your business
pays for credit card transactions, normally on a per transaction basis.
Factors we consider to list a few are, your industry type, type of products
you sell, the average ticket size of a transaction, bus type such as
retail, mail order, restaurant, medical office, government entity.
The illustration below will give you an idea of what the average
retail merchant account setup looks like and inform you of the
terms and factors you'll need to know before opening a merchant account.
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Terms Associated With A Merchant Account:
Your discount rate: = The rate the processor charges you per transaction
The interchange rate: = The amount of combined transaction fees from card companies
Monthly minimum: = The minimum monthly processing fee charged by the processor
Monthly statement fee: = A monthly fee charged by the processor
Equipment fee: = The amount of the monthly equipment lease payment
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Average Retail Setup:
Discount rate: .................................> 1.70% Of each transaction
Interchange rate: ............................> $0.25 Per transaction
Monthly minimum: ........................> $25.00 Per month
(This Fee Is Off-Set By Your Monthly Volume >See Note Below)
Statement fee: .................................> $12.00 Per month
Equipment lease payment: ............> $49.99 Per month
Note:
The monthly minimum fee (MMF) is offset by your monthly sales transaction volume.
If your MMF is $25.00 and you had no transactions this month, then you'll be charged
$25.00 to have an open merchant account.
If you take the $25.00 MMF and divide it by your discount rate of 1.70% this = $1,470.59.
If you have a sales volume less than $1,470.59, then all you'll be charged is $25.00.
The discount rate only comes in to play after you've reach $1,470.59 in sales volume for the month.
You will not be charged the MMF and the discount fee.
Example Transaction:
Sale amount..................................... > $100.00
Discount rate of.......... > 1.70%...... > $ 1.70
Interchange rate of..... > $0.25........ > $ .25
Total transaction cost...................... > $ 1.95
($100.00 X 1.70% = $1.70 + $0.25 = $1.95)
($100.00 - $1.95 = $98.05)
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YOUR TOTAL DEPOSIT....... > $ 98.05
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