Archive for the 'Rates & Fees' Category

What exactly is the monthly minimum fee? Well, this is a 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.

Example:

A merchant has a discount rate of 2.50%, a monthly minimum of $25, and a monthly volume of $600. The discount fees for the month will be $15.00 (.025 * $600). Because their discount fees are less then their minimum fee ($15.00 < $25.00) they will be charged an additional $10.00 as a monthly minimum fee ($25.00 - $15.00).

So, what is the purpose of this fee? Merchant account providers and their sales agents make their money by taking a very small percentage of every sale a merchant processes. Naturally this can be very lucrative. But, if a merchant is very small, they won't make very much money from them. So, to make up for this, they charge this monthly minimum fee. Then, when the merchant has a slow month, this fee is incurred and the merchant account provider still makes their profit from this merchant.

This fee is not required by Visa and MasterCard to have an account with them. Many processing companies offer merchant account with excellent rates without the monthly minimum fee. So, if you are shopping around for a merchant account and are told that you will have a monthly minimum fee, say, “Thanks. But no thanks”.

In what seems like an annual ritual, Visa and MasterCard have raised rates effective April 1st, 2023 .

Visa made relatively few changes to their Interchange levels. Only a few minor increases to several corporate card categories were made. On the other hand, MasterCard made many changes to key Interchange categories. This includes their Merit III category which affects standard credit cards in a swiped environment. They also changed how their quick serve cards are handled.

The expected increase to be passed along to merchants is 2 to 3 basis points (.02% - .03%).