There are a variety of different fees involved in online payment processing and it can sometimes be a bit confusing trying to work out just what exactly you’re paying for. This is a breakdown of some of the standard fees/rates you’ll encounter in the world of payment processing. Depending on the payment processors you’re with, they may or may not apply.

 

Discount Rate – A discount rate or fee is the percentage of each transaction that the processor charges a merchant in order to use their service.

 

Transaction Fee – A flat fee that typically accompanies the discount rate, it is charged on every transaction and is usually between US$0.20 and US$0.50.

 

Chargebacks – Chargebacks are reversals of credit-card transactions, usually when a consumer makes a complaint with their bank or credit card provider. Processors will generally charge between $20 and $50 per chargeback. Reduce Chargebacks.

 

Application Fees – Application fees are not as common as they once were, however some online processors still charge this fee. In some cases, application fees can be charged even if you are not approved and pricing can range from $20 - $300.

 

Settlement Fees – A settlement fee occurs when funds are sent to your account, these can range from $0.05 and $5.

 

Ongoing Fees – These can vary between processors and most commonly in the form of a monthly gateway or statement fee.

 

Processing Volume Limits – These are limits to the total volume a merchant can process, exceeding the limit can often result in the suspension of your merchant account and freezing of any funds within.

 

Minimum Processing Fees – This is basically a penalty for not processing enough transactions through a particular method (say Mastercard for example). These aren’t that common but something to look out for.