Author: Lisa Kaye
Credit card transactions have become a common way of carrying out online and retail transactions. Along with all the convenience and flexibility, such transactions can also wrap you up with a long list of fees and charges. How much and how many fees you pay for a certain transaction depends on the nature of that transaction along with the pricing structure followed by the service providers.
All these fees are charged as a ‘merchant discount’ and Interchange fee makes up for the larger part of that discount. However, depending on the structure, the bank may charge other fees for credit card transactions. It is better to understand most of these fees in order to understand what exactly you are charged for.
Account maintenance Fee – Any changes in an account after it has been set up will cost a certain amount that comes under Account Maintenance.
Annual Fee – It is a flat cost that is charged annually in order to maintain a merchant account.
Authorization fee- This fee is charged when an authorization is obtained by credit card processing equipment.
Address Verification Service (AVS) Fee- This fee is charged when the customers billing address is entered into the equipment during a transaction. The information entered is compared to the file at the issuing bank for verification.
Debit Network- It is usually a monthly charge that allows the merchant to access different credit card networks.
Gateway- This is also a monthly charged and allows access to an online payment gateway.
Monthly minimum- It is the minimum amount that will be charged in a month. If the total fee on a merchant’s account is less than monthly minimum than the additional charge is equal to the difference of the actual amount of that fee and the monthly minimum.
Over limit- this fee is charged if the monthly merchant processing volume is greater than the maximum volume declared in the Merchant Processing Agreement.
Transaction Fee- this fee is charged every time credit card processing equipment contacts the processor for information.