In my previous post, I covered the five basic credit card processing fees. In this post, I will cover the remaining, less common costs. These may occur occasionally or not at all.
However, as a business (and merchant account) owner you should still know the different credit card processing fees and how they impact your bottom line.
Credit Card Processing Fees (the less common fees)
Below are ten additional credit card processing fees that you may encounter.
- AVS Fee
- Voice Authorization Fee
- Chargeback Fee
- Retrieval Fee
- Online Access Fee
- IRS Regulatory Fee
- ACH Reject Fee
- Monthly Minimum Fee
- Annual Fee
- Application Fee
AVS Fee
AVS stands for Address Verification System. It is a system that checks if the billing address of the credit card on file at the bank matches what your customer provides. An AVS check occurs whenever your customer provides a street address or ZIP code. AVS applies more to online transactions since it helps filter potential fraud too.
Voice Authorization Fee
A voice authorization occurs when your customer’s bank requests additional information before approving the transaction. Voice authorizations may happen if there was recent fraud on their credit card or if the sale is outside their normal spending behavior. The terminal will prompt you to call the voice authorization number, which your merchant account provider will give you. Just follow the operator’s steps and hopefully, the transaction gets approved.
Chargeback Fee
A chargeback occurs when your customer disputes a charge with his or her bank. Merchant account providers charge this fee as a penalty. However, this credit card processing fee covers some of the administrative costs too.
Make sure you subscribe to my blog because I will share some tips on how to prevent chargebacks from happening!
Retrieval Fee
A retrieval is like a chargeback in that it involves a customer dispute. However, it is not an official chargeback. Your customer’s bank may request documents to verify the transaction, such as a signed receipt. If you fail to provide the required documents, then a formal chargeback will take place. Retrieval fees are less than chargeback fees, so it is always a good idea to respond promptly.
Online Access Fee
Merchant account providers usually have an online portal for customers to check transactions, chargebacks, and download statements. Therefore, merchants usually pay a monthly fee for this access.
IRS Regulatory Fee
Merchant account providers must report your sales volume to the IRS. This fee covers the administrative costs for supplying the IRS and business owners with a 1099-K form.
ACH Reject Fee
If you do not have enough money in your bank account to cover your credit card processing fees, they will reject. Like the chargeback fee, the ACH reject fee is sort of like a penalty. Merchant account providers may terminate your agreement if this happens too often, so it is crucial you keep as much money in your bank account to cover processing expenses.
Monthly Minimum Fee
A monthly minimum means your credit card processing fees must equal a certain dollar amount every month, otherwise, you pay the difference. For example, if you have a $15 monthly minimum then the card processing fees must equal $15 each month. The fixed monthly fees do not count towards this minimum. So, if you only processed two sales that generated $5 in processing fees, then you are charged an extra $10 to meet the “minimum” of $15. Many businesses rack up more than the monthly minimum fee so they usually never see it.
Annual Fee
Although this is becoming less common, some merchant account providers charge an annual fee. Merchant account providers charge annual fees at different times so it may vary. For example, some charge them in your first month of opening your merchant account and others at the one year anniversary.
Application Fee
Some merchant account providers charge a fee to process and review your merchant account application. However, it is not very common anymore. I suggest you stay away from a company trying to charge this credit card processing fee because if for some reason they decline you, they still may try to charge you.
Conclusion
When you are looking at your merchant account application, it is easy to get overwhelmed. Although there are a lot of different credit card processing fees, not all of them will apply. Also, every merchant account provider has their own pricing scheme too.
If you need help reviewing your processing statement or merchant account application, then send me a note in the Contact Me page. Thanks for reading!