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The Top 5 Fees They Don’t Tell You About


These rates and fees are typically overlooked by most merchants when signing up for a new merchant account.  It’s not a coincidence.  Most sales reps don’t ever talk about these fees.  Here’s my list of the top 5 fees most sales reps conveniently forget to go over with their prospective clients.

1. Teaser Rates

Have you done a search for “Merchant Services” or “Accept Credit Cards” lately?  If so, I’m sure you’ve seen at least one ad with a rate listed of 1.05% or maybe even one as high as 0.50%.  We don’t call these teaser rates because they’re not real rates, we call these teaser rates because they don’t apply to all of your transactions.  Typically these rates apply to PIN Debit transactions or a swiped debit transaction.  If it’s the latter then you’re going to have a significantly higher rate on the true credit cards you take, somewhere around 1.69% to 1.89%.  If it’s the former, well then, the ad creator is just stating a general fact about processing PIN Debit transactions.  These rates are determined by the debit network listed on the back of the card (i.e. Starr, Interlink, etc.) and are the same no matter which processor you choose.

2. Non Qualified

A typical quote might go something like this, “1.59%, $0.18 per transaction, $10 per month”.  Some thoughts you might have are, “Is it really that simple?  It seems so straight forward.  Where can I sign!”  Well hopefully you’ve read the contract or you’re reading this first and I’m awakening the sleeping contract reading giant deep within your soul.  Most merchants are setup on a 3 tiered system.  The highest rate in the tiered system is the Non Qualified rate.  This rate usually applies to Corporate Purchasing Cards and Government Purchasing Cards but some merchant service providers also apply this Non Qualified fee to Rewards Credit/Debit Cards.  According to “The Survey of Consumer Payment Choice” issued by the Federal Reserve Bank of Boston in 2010, over 60% of consumers have rewards credit cards.  That translates into at least 60% of your potential customers which  means 60% of the time the “1.59%” rate you were quoted isn’t what you’re going to pay.

3. Mid Qualified

Not to beat a dead horse but you should be more concerned with your Mid Qualified and Non Qualified rate than the Qualified rate the sales rep is giving you.  The Mid Qualified rate is the 2nd to highest rate you’ll pay in the 3 tiered system.  This is the rate that 60% of rewards cards typically applies to but there are other reasons you get charged this rate as well.  The two other main reasons for getting a Mid Qualified transaction have to do with address verification and how you handle each transaction.  Make sure to ask your representative how you can avoid getting these rate surcharges.  If they’re not interested in educating you then maybe this processor isn’t the best fit.

4. PCI

You can learn more about what PCI is here.  For our purposes, all you have to know is that 98% of all merchant services companies charge a PCI Fee.  Most of them don’t list the PCI Fee on their application documents.  Even if the application states that there is no annual fee, be careful; because, even though PCI is usually charged annually it is not considered an annual fee.  If your representative says there is no PCI Fee, you might want to go all Sherlock Holmes and call the customer service line and ask them.

5. Account Closure

Surprisingly there are companies out there that don’t rely on good business practices like quality customer service and keeping their merchants rates low, to maintain their customer base.  Instead they charge a high fee to their merchants to close the account, even if the contract is up.  I personally feel this is one of the worst “hidden” fees out there.  Please read the fine print and make sure you have all your questions answered prior to signing up.

Free Equipment

cho1Do you need equipment? Total Merchant Services offers equipment for free to all our merchants. That leaves you with one less bill every month and one less thing to worry about.

Getting Started

  • The application process is short and sweet
  • Once your application is submitted we usually have you up and running in 24-48 hours
  • We’ll have a new account training representative contact you once your account goes live.
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