how per transaction fees work
per transaction fees are required of the merchant from a few different entities in a transaction merchants partner with merchant acquiring banks to facilitate all of the communications in an electronic payment transaction merchants also set up a merchant account with the acquirer which serves as the merchant s primary deposit account for funds from each transaction a merchant who receives a lot of electronic payments will rely heavily on the merchant acquiring bank making the terms of the merchant account agreement an important factor for a merchant 1components of per transaction feesmerchants pay a variety of fees related to the acceptance of electronic payments some fees will vary while others are fixed merchants have a wide range of acquiring banks they can partner with for electronic payment services each acquirer has different fee structures and service capabilities allowing merchants to choose the acquirer that is best for them acquirers will typically charge per transaction fees as well as a monthly fee for the management of a merchant account the second component of a per transaction fee is the fee paid to the network processing company merchants establish the types of branded cards they can accept at their store based on the processing network of their merchant acquiring bank payment card companies such as mastercard visa discover or american express each have their per transaction fees that will be charged to the merchant in a transaction payment card company fees also called wholesale fees are usually a fixed fee per transaction some acquirers may be able to negotiate lower wholesale fees through network relationships with processors acquirer and processor fees are the main components of a comprehensive per transaction fee in some cases other fees for a merchant may also apply one added cost merchants might encounter is a terminal fee which is a per transaction fee charged to a terminal provider such as square for the use of a terminal in an electronic payment card transaction 2per transaction fees are the reason why some merchants impose a minimum that customers must spend if they want to pay with a credit or debit card for example merchants may set a 5 or 10 minimum for credit card and debit card transactions smaller merchants who are less able to absorb excess card fees are more likely to impose these minimums 3american express visa mastercard and discover all charge approximately the same fees with slight variations that amount to cents in some of the components generally visa charges the lowest total amount this depends on the cards used as well as cards with rewards often have higher fees merchant account statementsacquirers will detail a merchant s total monthly costs and transaction activities in a monthly statement generally service provider transaction fees will be delineated in one of three categories interchange tiered or subscription the interchange section lists the payment card company fees and service provider fees separately on the merchant s monthly statement the tiered section assesses different fees based on the transaction type such as in person versus online subscription fees are also assessed on a monthly or annual basis 