“Why do merchant account companies charge set up fee’s and why to watch out for companies that do not.”
Upon signing a merchant services contract, there may be additional fee’s. There are many good reasons as to why these fees exist and although it may seem bothersome to have to pay them, they are incepted and initiated with good reason.
Firstly one needs to realize that all merchant services providers, weather they are ISO’s (Independent Sales Organizations) or Member Banks, are always subject to Interchange.
Interchange can easily be explained as the “cost of doing business” for Visa and Master card. So right off the bat, providers are dealing with a minimum fee just to be able to offer the services. In addition to the basic interchange, providers do need to profit as well, so they can never offer just interchange pricing, anything in addition to the basic rate is considered a fee, however it is essential to being able to provide the service.
Any contract that has a UN realistic rate is a scam; you can look forward to all kinds of additional hidden rate structures, as no one provider can afford to charge just interchange. It is important to remember and consider this when reviewing a very low qualified rate.
Other fees may include processing, or Authorization Fee’s. Just like Interchange, there is a real cost to the banks themselves who control the deposit’s. Knowing that there is an authorization fee again, however bothersome, basically solidifies the fact that one is dealing with the bank directly and therefore offering a sense of security for the merchant. When there are no authorization or push fees, they are making up for this cost elsewhere, so again, watch very carefully where the profit is being collected.
Statements and Monthly Service fee’s are a very common aspect of any contract. These fees are generally paying for the service a merchant receives. There is real cost involved in processing your transactions, sending out statements and so forth. When these fees are evident on the applications, one can take comfort in the fact that they will receive customer service, statements and all other services associated with processing for a merchant.
The real cost associated with processing for a merchant have to be considered. To be faced with an application that has no basic fee’s, and very very low rates (if they offer rates at all) is something to be very cautious of. As we have clarified, these fee’s are generally associated with the costs that trickle down from a collective of companies coming together to offer you this service.
If there are no fees, then there is no service and these are the companies to watch for. Always remember that as a customer, you are entitled to information and negotiation so try to negotiate the fee’s that mean the most to your processing needs. One must realize that fee’s originate from gaining service, everything costs money, when things don’t have any monetary value, and they generally lack established value as well!
