What High Risk Retailers Should Know About Merchant Account Fees

Oct 16, 2017

When applying for a merchant account, high risk retailers will wonder what the merchant account fees are up front once they are approved and begin running an account. This information is for your good; just so you understand why some deductions are made each time you make a card transaction. On top we’ll take you through a few merchant account pricing models so you can go for the provider with the one you prefer.

Merchant account fees

For every card transaction you make, your merchant account incurs the charges below;

Transaction fees– They make up the major cost of operating a merchant account. Transaction fees are payments for every transaction you make, whether approved or rejected by the customer’s card issuer.

Fixed fees– On top of the fee paid for each transaction, a flat fee will be charged by your credit card processors to cater for extra services like customer support charges, monthly statements. A few processors will charge an annual flat fee.

Variable fees– For example chargebacks; these are fees you only incur when you do something that validates them.

Hidden fees-These are minor fees (which we DON’T charge at EMB) such as security charges, file fee, or conversion fees which often come from the blues and shoot up within months of signing the contract.

Merchant Account Pricing Models

There are four primary models providers utilize in pricing. They include;

Tiered– It is the most commonly used plan among payment processors; perhaps loved for its complex pricing model that allows account providers to stage-manage customers. Be sure to fully understand these fees.

Interchange-Plus– So far the most transparent pricing model. It plainly lists all fees and junks upfront.  After signing up, details of all charges are sent along with your monthly statement.

Membership– just like the Interchange-Plus, the membership model is transparent, but charges a lower fee to favor retailers with huge amounts of transactions.

Blended-A model preferred by processors who do not charge monthly fees. As a substitute, all costs are merged to form a standardized rate per transaction.

Wrapping Up

However, when checking rates, be warned that they may vary and fluctuate depending on different factors. That’s why you need to confirm with EMB for the most accurate rates. Nevertheless, rates for most high risk industries start from 2.99 percent, but specific extremely high risks e.g. debt consolidation may start at 3.95 percent. Offshore accounts are also very costly with rates ranging between 5 to 9 percent. But with EMB, you will always enjoy the best rates.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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