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Merchant Account Fees: How They Actually Work?

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Merchant Account Fees


Small businesses have a lot of expenses to deal with. It’s important that you keep track of where your money is going and how much it costs you to run your business. One way to do this is by using a merchant account provider. A merchant account is essentially an online business account that allows you to accept payments online via debit cards, credit cards or electronic checks. There are several different types of merchant accounts available so make sure you understand what each one entails before signing up with one company over another!

What are Merchant Account Fees?

Merchant account fees are the fees that you pay to your merchant account provider for the privilege of accepting credit and debit card payments. They’re also known as interchange fees, or interchange rate.

These fees vary by merchant and industry, but typically range from 1% to 3% of each transaction amount processed through your account.

Monthly Fees

Monthly fees are charged monthly. They usually vary depending on the amount of transactions processed, but they can also be based off a flat fee or percentage of total sales.

Transaction fees

Transaction fees are charged by the payment gateway. This can be a fixed rate or a percentage of the transaction amount, depending on which account you use and how much you buy.

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Card Not Present transaction fees

Card not present (CNP) transactions are those that occur with a customer’s card not physically present. These types of transactions include:

  • Online shopping via websites like Amazon, eBay, and other e-commerce platforms;
  • Buying tickets for events through ticket brokers or the venue itself; and
  • Using your phone to buy goods from an app or website that does not require you to enter personal information on the screen when paying.

American Express Fees

American Express charges a $1.50 to process the transaction, but that’s not all. There are also additional fees:

  • Interchange Fees: These are charged when you use your card at another merchant and they’re usually 1% of the transaction amount. This can sometimes add up if you spend a lot on one card!
  • Card Not Present Transaction Fees (CNP): These are charged when customers transfer money using their Amex cards from one bank account to another or from an app like Venmo or PayPal, which means there’s no actual physical card involved in this transaction at all.*

Interchange fees

Interchange fees are a percentage of the total transaction amount that you pay to your card issuer. These fees are paid by merchants to their bank when they accept credit cards as payment for goods or services. Interchange fees can vary depending on the type of credit card used and how much money is being processed through a particular merchant account.

For example, if you pay $100 for groceries with your Visa card and there is an interchange fee of 3%, then that would be added onto the price at checkout before your purchase is complete (assuming it wasn’t already included). If another merchant accepts cash instead of using plastic—without any additional processing fees—then this would lower their cost per transaction because they wouldn’t have any overage costs associated with accepting cash payments versus using debit or credit cards like Visa/MasterCard.”

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Understanding the various merchant account fees will help you make a more informed decision when choosing your merchant account provider.

The first thing to remember is that there are several different types of fees that can be charged by a merchant provider. Some examples include:

  • Monthly service fees
  • Setup/maintenance charges (if applicable)
  • Returned payment processing fee (if applicable)

Other considerations include: * How long does it take for me to get approved? What happens if I don’t get approved in my first attempt at getting accepted into the program or if there is an issue with my application during processing? Is there an appeals process available?


We hope this article has helped you understand more about merchant account fees. We recommend you do your research and compare different providers before choosing a provider.