The statement fee will be listed on almost every statement. The cost to the agent (if independent) ranges from $3–$10 per month. Some processors will include online review of statements and other features including an “account on file” and/or paper statement with the statement fee. Agents will typically price the monthly fee at $10 to $15 per month to the merchant.
The AVS fee is a common fee for merchants who process online or through manual input. The Address Verification System is a fraud detection tool that compares the numbers in a street address and zip code given with the address where credit card bills are mailed. Most processors charge $0.05 for each transaction that uses AVS. Failure to use this fraud detection tool will result in higher costs.
The Batch fee, also known as the Settlement fee, is charged for transmitting credit card transactions at the end of the business day. This finalizes the authorizations for the day. It can range in cost from nothing to $0.35 per batch. For a merchant who batches every day in a 30-day month at $0.25 per day, this will add up to $7.50 per month. Important tip: If you have four checkouts and process credit cards, PIN debit, and EBT (Electronic Benefit Cards); be advised that you would have 12 batches per day or 360 in a 30-day month. That quarter a day now becomes $90 a month. There is a true cost for batching, but agents do make a profit on it.
IVR (Interactive Voice Response) and Voice (operator) approvals will cost between $1.00 and $2.00 each time they are used. These occur when the merchant chooses to call the toll-free number of the bank to verify a credit card instead of using the terminal, or when the terminal prompts the merchant to call the center.
The Debit Access fee is aptly named. This monthly fee is assessed for accessing the Debit Networks through the credit card processing network to enter four-digit PINs. The fee is often $5.00.
Monthly Minimums are normally not an issue for any but the smallest volume merchants. To find the minimum volume per month to avoid a monthly minimum fee, simply divide the amount of the fee by the lowest rate available to the merchant. Monthly minimums are not a bad idea to guarantee some minimum profit on the account. In most cases, $2,000 in sales volume will eliminate the monthly minimum. If you do not anticipate making more than $2,000 a month, you might consider accepting Square until you consistently hit $2 or $3K a month in sales.
Wireless Activation is a one-time fee, but it is per wireless device and applies whether the device is bought, leased, or reprogrammed.
Wireless Access fees are assessed monthly for airtime and range from $12.50–$30 per device. If buying for a fleet, the business owner needs to shop around, negotiate, and figure that monthly cost into the return-on-investment (ROI) calculation. This will help to determine if the wireless cost is covered by the savings from swiping cards instead of keying them in.
Wireless transaction fees are always assessed when wireless terminals are used. The fee ranges from $0.05–$0.20 per wireless transaction. This fee is in addition to the transaction fee of the processor.
ETF is a much-maligned fee in the industry and with good reason, in my opinion. The early termination fee is a one-time fee that occurs when a merchant leaves the processor before the contract expires. It can range from $195 to tens of thousands of dollars. The contract states that the merchant acknowledges that the fee is not a penalty, but is to cover the loss of profit for the processor for losing the account.
However, if that is truly the case, why do many processors allow the sales agents to set the ETF or receive it upon loss of the customer? If the sales agents’ promises match the results, few merchants would want to jump ship. It has been observed that the processors who lure merchants with lies and deceit tend to have the largest ETFs. While this practice may seem to aid merchant retention in the short term, it effectively incentivizes agents to be complacent in providing good customer service. Business owners should try to negotiate this fee down or eliminate if possible. One processor I write for has a $395 ETF, but it is waived if you give 45-day notice. This allows the company or the agent to remedy the cause of the merchant wanting to leave.
The authorization fee (sometimes called a W.A.T.S. fee) is assessed for every authorization request. So, what is the difference between a transaction fee and an authorization fee? Not much and that is the problem. The transaction fee is accessed on transactions when approved. An authorization fee is for the attempt to authorize. Declined transactions are only charged the authorization fee, approved transactions face both fees. If you own a convenience store and you negotiated the transaction fee down to $0.03 or so, you will need to be sure there is not an authorization fee to make up for it.
The Annual fee is assessed once a year. This fee is normally a profit booster for the processor and sales agent. My opinion concerning annual fees is much like it is on application fees; negotiate or omit them depending on where the agent sets the rates.
Supply club (or other phrasing) can cost between $10 and $20 per month for terminal supplies. It is not a bad idea to have this if you go through a lot of paper. As you run low, just call and request a box and get it in a couple of days.
The one highly contentious fee is the customer service fee (many banks also have tried them). Good customer service should be included for no cost; it is every company’s cost of doing business.
The T & E fee is a transaction fee for a credit card being used for travel & entertainment.
An NSF fee is assessed for non-sufficient funds when the processor goes to withdraw money to cover processing costs from a merchant’s dry account. The fee can range from $20 to as high as $50. The sales agent receives no part of this fee and will not be able to waive or negotiate it down.
The DDA change form fee is typically $25. It is for changing a merchant’s DDA or demand deposit account information. In other words, there is a fee charged to change the bank account associated with the credit card processing account.
Signature capture was for terminals big a few years ago. It came with monthly and transactional fees. If you have these fees now, it is a sign that you need a review of your processing fees. Several EMV terminals allow a signature to be captured on to the device for no charge. As of April 2018, signatures are no longer required for EMV transactions to defend a Chargeback.
EBB stands for enhanced bill back. Some view it as a sneaky fee designed to hide higher fees from the business owner. The way it works is the merchant receives the credit card processing statement listing the costs for the month. However, some fees are carried over into the next monthly statement, appearing to be a recap of the previous month—until you review several statements at once. The author has only seen this done once, in a case where a Detroit area cemetery was being greatly overcharged.
The enhanced bill back works because it is incredibly difficult to decipher. A statement normally can be broken down a in just a few minutes. In the case of the cemetery, it took several statements and hours of running the numbers in different scenarios to find the formula that worked to produce the charges on the statements.
ERR stands for enhanced rate recovery and is a much friendlier enhancement than EBB but can be misused and misunderstood. With ERR, an agent may set lower fees (whether tiered or Cost Plus pricing) for swiped/ EMV dipped lower cost transactions and higher profit levels on cards carrying more risk (thus costing more in Interchange).
ERR can be problematic because instead of offering the best overall cost, sales agents may be tempted to discount the one area while boosting the rate in the other categories. To make it more attractive for merchants, ERR can be made to work in the right situations.
While EBB is flat out deceitful for merchants, ERR has some redeeming qualities. However, sales agents can use these fees to hide profit so competitors cannot alert you to it.
PCI stands for the Payment Card Industry and is comprised of the card brands. Most business owners only know about PCI because they have seen a reference to it on their statement with an annual fee ranging from $79–$400, or a monthly fee ranging from $4.95–$19.99. Most processors now include a service for completing your annual PCI compliance.
PCI Non-Compliance Fee is a money grab in most cases. Although, there is a risk to the processor to have a merchant that is not compliant; many processors just charge $29.95- $39.95 a month without explaining how to eliminate the fee.
EMV Non-Compliance fee is a flat-out money grab. There are no mandated fees by the card brands if you do not have an EMV terminal aside from removing protections from fraud. Easy solution is to get and properly use an EMV terminal.
Part of the Obamacare law includes the mandate that credit card processors issue a Form 1099-K to business owners who process $20,000 or 200 transactions annually. These amounts must also be transmitted to the IRS. The IRS also requires processors verify the business legal name and EIN. If the names or numbers do not match, the IRS may require 27% withholding. Because of the added work required, many processors added a Regulatory Fee that may either be a monthly or annual fee. Some will actually try both.
Technology Security & EMV Fee is a fee found on a convenience store statement along with two other fees, one being the Domestic Assessment & Service Fee These two fees don’t seem to have any cause other than profit enhancement. These two fees came to 0.40% of a store with over $200,000 in processing creating fees over $800 in a single month.
Advanced Settlement Fee is a fee charged by some processors for Next Day Funding. For the convenience store above, it was 15 basis points or 0.15%. $300 for the above convenience store. Others processors call different things and I’ve seen as low as 0.03%. It a business wants next day funding, this fee may be unavoidable.