Understanding Common Credit Processing Fees, Part 2

In part one of this two-part blog, we went over a few of the common fees you might see on your credit card processing statement each month. You’ll receive this statement from your processing company whether you’re a large commercial lender or a small family business, and it’s important to know how to interpret it.

At Merchant Card Advisors, we provide credit card processing services for all varieties of business. While doing so, we ensure all our clients fully understand the reports they’re receiving and why they’re being charged the amounts they’re seeing. Let’s go over a few more of the fees you might see on a credit processing report, plus what they mean and whether you can do anything about them.

Early Termination Fee

In some cases, you’ll sign a specific contract with a credit card processor that dictates a period of time – usually a year, but there are others. If you break this contract before the end of it, just like with any other legally binding agreement, you could be exposed to fees that are potentially quite high.

For this reason, we recommend doing your research and being very careful about the contracts you sign. Ensure that rates won’t slowly rise over time, and be completely sure you intend to stay in the contract for its full duration.

Payment Gateway Fee

Similar to other fees called monthly terminal fees, these refer to those where you’re paying for a gateway that helps you run your transactions. Without this service, the entire process would be disrupted for all processors.

A common type of business that will see payment gateway fees is the e-commerce store that runs actual transactions through its website. These may also come with per-transaction processing fees to go along with the flat monthly rate.

IRS Reporting Fee

Like with any monetary transaction, credit card transactions have to be reported to the IRS. For most businesses, this is done using IRS Form 1099-K at tax time, taking the entire previous year into account.

As a processor, we report these transactions directly to the IRS for a small fee (usually $2-$5 monthly, or even less in some cases). Some processors only charge an annual fee here, while others do so monthly.

Other Additional Costs

While we’ve gone over a number of the different fees you may run into on your processing report, we have not gone through all of them necessarily. Different processors all have their own various fee structures they use, and while most of these tend to mimic the areas we’ve listed here, there are some exceptions. If you’re ever unsure about a fee you’re being charged, simply call us and we’ll immediately explain exactly what it is to you.

For more on what the various fees on your processing report mean, or to learn about any of our credit card processing services, speak to the experts at Merchant Card Advisors today.

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