Monthly Minimum Fee: fee which guarantees the merchant will be paying a minimum amount each month in processing fees. If a merchant’s discount fees do not equal their monthly minimum fee they will be charged the difference between the two in addition to their discount fees.

(The merchant discount rate (MDR) is a fee charged to a business by the company that processes its debit and credit card transactions.)

Example: A bicycle shop had a great month! Most of their customers paid with cash (hey- it could happen!) so their monthly processing fees totaled just $5. Since their minimum processing fee is $10, they will see an additional $5 on their statement to reach their $10 minimum processing fee.

Monthly Statement Fee: charged by your processor or merchant services provider and it is a fixed fee, regardless of the number of transactions processed. For many processing companies, the cost of support and the monthly statement are covered by this fee.

Monthly Service Fee: some processors call their statement fee a service fee and there are some processors who charge both (we do not agree with this practice). Each month, our merchant see a monthly statement fee, on the statement that is delivered each month. They are not charged for additional service-related calls.

Annual Fee: fee charged on an annual basis (be AWARE of bi-annual fees) by the processing company. This annual fee can range between $0 and $160.00 and typically covers the expense of boarding a merchant account. One time per year, the merchant pays their annual fee- it shows up on their statement and they receive a reminder before the fee is charged.

Regulatory/IRS Reporting Fee: a relatively new fee caused by the recent regulations requiring all merchant processing activity to be reported to the federal government. Most merchants pay this fee in February of each year and they receive a 1099K each year, which outlines their annual processing activity.

Monthly Supply Programs: fee charged for ‘free’ supplies or equipment replacement service.
Supply programs are great solutions for merchants who run through 6 or more rolls of paper per month (on average). Some merchants do not use enough paper to warrant this added expense and they simply call in to order paper when they need it.

PCI Annual/Non-Compliance Fees: The PCI Annual fee is charged annually for PCI (Payment Card Industry) compliance. A Non-Compliance fee is typically charged monthly if a merchant is out of compliance.

We educate and explain the importance of PCI COMPLIANCE to our Merchants . Each year, a reminder is sent out that walks through the self-assessment questionnaire to make sure the system is in compliance. As long as a business maintains compliance, they’ll never have to pay a non-compliance fee.

The CRAZY thing about the credit card processing industry is that there are so many ways to HIDE these fees! If your monthly processing rates are high enough, processing companies say that they do not have these fees (your higher rates cover them). Checking the fine print of your merchant agreement for any of these ‘extra fees’ (and others we may have missed) is your best defense against paying too much. Fees are a part of accepting credit cards and they are a cost of doing business: minimizing the fees, educating our merchants, and making sure they are paying a fair price is what we are all about.

We advise our merchants to treat the processing rates and fees associated with accepting credit cards as a cost of doing business- just like parts and supplies from vendors, the employee expense, and the tax burden. When you calculate the overall ‘Effective Rate’ each month, it’s easy to make sure the rates are in line and to make sure you are budgeting properly.

Remember that accepting credit cards helps you gain more business and there is a price to pay for that convenience- it is our goal to help you understand the rates/fees and understand when you are getting a fair deal!

Cheri Perry

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