Collecting credit and debit card payments from clients is an excellent way to increase your customer base, but related costs can threaten to shake your bottom line.
Credit card processing rates usually vary from one payment enabler to the next which is why you must dig deep.
A high-risk classification doubles the trouble for you unless you partner with a high risk credit card processor who understands your industry.
Again it all boils down to research and thorough search—only entrepreneurs who familiarize themselves with the credit card processing environment enjoy low-cost merchant services.
Traditional banks and payment providers would rather stay away from risky businesses. A high-risk classification can be caused by;
- High chargeback risks
- A poor credit score
- Dealing in products that call for age-verification. i.e. e-cigarettes, adult entertainment
- Selling items in high tick sales & volume.
That’s not all, different service providers will classify you as “high-risk” for other different reasons and subject you to exorbitant rates.
How much you spend on processing matters because you don’t to drain all business earnings on transaction fees.
Types of Fees to Expect When Seeking Merchant Services
Merchant services come with different fees. Some of the common charges include;
- Merchant account Setup Fees: Depending on the service provider, merchants must pay some account setup fees at the opening. Fees may be higher for high-risk merchant accounts.
- Regular Monthly Fees: This is the monthly fee merchants pay to maintain an active low or high-risk account.
- Per-transaction Payment Fees: This refers to the fee per transaction. Some low and high-risk account services use the flat rate approach while others base their model on interchange rate.
- Payment Capture Fees: These are charges paid if a retailer orders a physical card processing terminal.
- Terminal Fee: Various service providers charge a fee for fixed contract arrangements. The terminal fee does not apply in the absence of such a contract.
- Chargeback Fees: these are the fees that accumulate when a merchant loses in chargeback claims and reverses money to customers. In essence, the retailer takes the liability by paying for the cost of those reversals.
- PCI Compliance Charges: This fee comes only as a penalty for any merchant who acts against PCI regulations.
These are some of the most common fees tied to low and high risk merchant accounts. Always go through all fees to avoid surprises.