Merchant Credit Card Service Costs

Discount Fee: This is a percent of each credit card transaction paid to the processor for handling the transaction. A good discount fee today for a qualified Visa or M/C transaction* is around 1.79 percent. Therefore, let's say a customer purchases $100 in services via credit card and your discount fee is 1.79 percent. Your processor will take $1.79 off the top and you will net $98.21 on the sale.

* Discount fees vary based upon the risk characteristics of the particular transaction. There are many criteria that go into classification of a particular transaction, but transactions are generally classified as "qualified, mid-qualified and non-qualified." To minimize fees, gain an understanding of your processor's qualifying criteria and strive to qualify for low risk and thus low cost transactions.

Transaction fee: In addition to the discount fee, processors charge a flat fee per transaction. A competitive fee today is 25 cents. So, the above mentioned sample transaction will actually net you $97.96 after the transaction fee.

Statement Fee: This is a monthly fee charged to you, the merchant, for providing you with a written statement. A competitive fee today is between $5 and $10 per statement.

Monthly Minimum: Most processor agreements have a minimum dollar volume that must be "run through the system" to avoid a monthly fee. For example, if you don't charge at least $1,700 in a month you will be charged, say, $25.

Equipment Charges: The only equipment that might be needed is a terminal with a built-in printer to swipe cards and print receipts. These are simple little machines that cost around $300 to $600 new. Used and refurbished machines are also widely available. Not all merchants need a terminal, but to qualify for the lowest discount fees a terminal will probably be required.