How much do merchants pay to accept credit cards?

The discount rate is one of the processing fees charged to your merchant account. There are various fees associated with having a merchant account. These could vary, depending on the type and company providing the service, but all merchant accounts have 2 main costs:

Discount Rates: With most merchant service providers, every processed sale is classified into 1 of 3 qualification levels (Qualified, Mid-Qualified, & Non-Qualified), and is charged a discounted percentage rate associated with that qualification. Each sales level and rate is determined by the type of card used, and/or how it is accepted and processed.
Transaction or Authorization Fee: This fee is charged for each electronic authorization request and transaction made, including all approved and declined sales, returns, voids, and batch settlements.

The discount rate is simply, a percentage charged on each transaction. It is usually lower if you are swiping cards, and higher if you are keying them in or taking Internet transactions. For example, if you are set up with a discount rate of 2.5%, and you charge a customer $100, the discount fee would be $2.50.

The per transaction fee is the fee charged by the processor to process each transaction. This fee is charged on every transaction, regardless of whether or not the transaction is approved or declined. It is charged on Visa, MasterCard, Amex, and Discover cards. Common transaction fees are 20 cents for swiped and 30 cents for not swiping (keying). Transaction fees can be slightly higher for wireless transactions.

A monthly minimum fee is not an extra fee but rather a minimum amount that the processor or merchant account provider needs to have in fees. However, if your monthly fees are less than this minimum, then you are charged the difference up to the minimum. For example, if you have $20 in fees in a given month, and your account has a $25 monthly minimum on it, you will be charged an additional $5 to meet the monthly minimum.

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What is a charge back?

Charge backs occur when a credit cardholder informs the credit card company that the charge was not authorized, or that goods or services were not delivered as promised. The chargeback mechanism exists primarily for consumer protection.

Why do I need a merchant account?

A merchant account allows businessmen to accept credit card payments. These days most consumers prefer to shop using their credit/debit cards, if a merchant accepts credit cards payment, the sales could increase from 15% to 100% depending on the types of business.

How do I apply for a merchant account?

Using a merchant account, a business owner has the ability to accept credit cards in virtually any retail environment, including the Internet.

To apply for a Merchant Account, all you have to do is first submit your info to the Merchant Account Provider you want to work with.

What is a merchant account?

A merchant account is a special account that allows your business to accept payments by debit or credit cards and electronic payments through a Web site. You must have a merchant account if you want to be able to accept credit cards from your customers.

What is a payment gateway?

A payment gateway is the link between your business merchant account and the customer's credit card. A payment gateway is an e-commerce application service provider, it is the equivalent of a physical point of sale terminal.