Merchant Account

Merchant account is usually provided by a bank. Merchant account is a special account used to receive the proceeds of credit card transactions. The financial institution that issued the credit card will only transfer the proceeds of credit card transactions to a merchant account. Therefore, in order to process credit card transactions over the internet, your business must have a merchant account. However, there is an exception to this rule, which we will explain later as we continue discussing automated systems for online credit card processing.

Merchant Account Related Fees – Banks have different rates and fee structures that vary from bank to bank. Below are some of the most common types of fees charged by the merchant account providers:

Statement Fee – fee charged for issuing monthly statements.

Application Fee – fee charged for applying for a merchant account (usually non-refundable).

Discount Rate – discount rate is a fixed percentage charged by the bank on the amount of each transaction.

Transaction Fee – a fixed amount charged on each transaction.

Monthly Minimum – is the minimum fee paid every month regardless of the number of transactions

Chargeback – reversal of a credit card transaction it is called a charge back. Usually when a customer is not satisfied with the product or if the customer is mistakenly charged for a product he never purchased, then the charge is reversed and is called a chargeback. There is usually a fee associated with a chargeback that varies based on the merchant account provider.