Merchant Services: Decoded

Applying for a merchant services account is one of the most important aspects of your business. In order to be able to accept credit/debit card payments you have to have a merchant services account. I know, I know – merchant services accounts are hard to understand, there are so many fees associated with them, we could go on and on about merchant services… But the bottom line is you have to have one. Merchant Services accounts provide you with an easy way to process credit/debit card transactions. It is very important for you to be able to understand how your merchant account works.


One of the best pieces of advice that I can give you is to review your statements each and every month. I had a client contact me one time saying that she processed all credit card transactions at 2.04%. Of course I was thrilled for her because that is an extremely good rate, but I wanted to double check the math for her because that rate sounded too good to be true… And it was. For months she was under the impression she was paying 2.04% when in reality she was really paying double that to process her credit card transactions.


The best way to decipher your merchant services statements is to understand their lingo. Here are some key terms to help you understand your merchant services statement:


Total Sales: the total amount of money processed during that time period

Net Sales: the total amount of money that has been/will be deposited into your account

Monthly Statement Fee: this is normally a fixed fee that you will receive each month for simply having a merchant services account

Monthly Minimum Discount: this fee is dependent on the amount of your monthly discount fees. For example, if you have a monthly minimum of $10.00 per month and you only paid $8.00 in discount fees, then you will be charged the minimum discount. If you pay $20.00 in fees then the monthly minimum will not apply because you paid more than the minimum in fees.

Batch Fee: this fee is charged every time you batch, which normally happens once a day. You only batch if you have transactions that need to be captured. If you do not have transactions that need to be captured, then you will not batch.

Transaction Fee: this is a small fee that you pay when a transaction is placed.

Discount Fee: this is the rate that you pay for your transactions to be processed.

Network Fee: depending on how your account is setup you may receive fees from Visa, MasterCard, Discover, and American Express directly.


Having a merchant services account can be tricky. Some accounts are setup to withdraw fees daily, so you never really see what comes out of your account until you look at your statement. I think of this as an “optical illusion” since you never see this money come in; you also never see it go out. So, I challenge you to review your statements and see what percentage you are actually paying. An easy way to figure out your total costs is to calculate your Total Fees and divide that by Total Sales. This will show you what percentage is being taken out of your account to pay for your merchant services. If you are not happy with the number that you come up with you have a two of options:

  1. Call your current merchant services provider and see if they have a better rate available.
  2. Shop around for better rates. We will be happy to go over your statements with you to see if we can save your money in this area. We entered the merchant account services business to help our merchants save money.

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