What a great idea! Start accepting credit cards and watch your profits soar. Nothing could be simpler. Or so you thought until you began researching merchant accounts. It can all get extremely confusing. There is an easy way to find
best deal that suits your business. You'll be able to compare apples to apples and have a clear picture of what merchant account will cost you.Let's take a look at some of phrases you'll encounter (in layman's terms) when you begin to search for a merchant account.
--- Merchant Account Provider - The company who arranges for your payment hardware or software and your ability to accept credit cards.
--- Nova - The company who processes credit card transactions and forwards them to appropriate credit card company for payment (Visa, MasterCard, American Express, etc.)
--- Set Up Fee - The one-time amount merchant account provider charges to set up your company in their system. For this example, we'll use a set up fee of $65.00.
--- Discount Fee -One amount (there are others) that Nova and merchant account provider deduct from each sale as a portion of their payment for your merchant account. We'll use a discount fee of 2.25%.
--- Per Transaction Fee - This is a second amount that two companies subtract from each transaction as a portion of their payment. For our example, we'll pick a per transaction fee of $.35.
--- Terminal or Gateway Fee - Whether you have a real terminal or a virtual gateway via Internet, you will be assessed monthly charges to cover use of that service. Let's say $10.00 for our example.
--- Statement Fee - The fee for your merchant account provider to send an itemized statement each month. An average amount we can use is $15.00.
--- Annual Fee - An annual fee just for having your merchant account. For annual fee example, we'll choose $35.00.
I know what you're thinking! But don't give up before you start. Remember, I'm going to show you a way to decipher all this information.
Choose a number -- any number. This will be total number of transactions you think you might conduct during course of a year. For our example, we'll use 100. Next, choose an average transaction amount for your product or services. We'll say $175.00 for now. Finally, we'll calculate a year's worth of charges by using amounts above and within definitions.
