Is It Actually Possible to Get a Merchant Account For Free?
Everything has a price, whether it's in cash, time, and/or effort. Common sense tells you that no one in business to make a profit truly gives a product or service away for free. So it is important to find out exactly how the so-called "free merchant account" companies get your money...
This article is meant to educate you about the fees that the "free merchant accounts" actually charge. I hope that this will help you make an informed decision that's right for your business.
The Basics:
All credit card transactions are governed by what are called the Interchange rates. These are the fees that companies like Visa, Master Card and others impose on payments processed by a merchant. There are a number of tiers or levels in the interchange rate and each credit card will be charged according to the tier or level it qualifies for.
For example:
1. Qualified rate - This is the rate charged when the card is present physically at the point of sale.
2. Mid-qualified rate - This is the rate charged when the card is not present at the point of sale; rather, the merchant takes an imprint of the card.
3. Non-qualified rate - This is the rate charged for "MOTO" transactions (mail, Internet or telephone order).
Furthermore, there are a number of fees that are attached to the merchant accounts upfront or as back-end fees.
The following are the most common fees you might encounter:
1. Transaction Fees - this is charged each time a transaction is completed. This is a flat rate, usually ranging from $0.10 to $0.25
2. Discount Rate - this is a flat-rate percentage that is taken out of each sale processed through the merchant account. Discount rates range from 0.95% to 7% or more, depending on the merchant service and its intended use.
3. Authorization Fees - this fee is charged as soon as the transaction is processed. Even if the transaction is denied, the fee is charged.
4. Statement Fees - this is a fee that is charged routinely for the generation of a monthly transaction record.
5. Monthly Minimum Fees - there is always a minimum fee charged when the total fees of that month for a given merchant account do not equal the minimum required business transaction level. For example, if the minimum fee is $15 and the fees incurred from using the service are only $10, then an additional $5 will be charged for that month.
6. Termination Fees - this is a penalty that can range from $150 - $275 if the merchant (potentially one like you) terminates their account before the term expires, which is usually around 2 or 3 years.
7. Free Equipment - the terminals, machines and other equipment that you're "given" practically always need to be returned to the merchant account provider at the end of the term in perfect condition. It costs approximately $295 - $475 to replace (or pay for) a damaged "free" terminal.
8. Batch Fees - when a merchant settles their terminal a fee is charged. This is usually a flat-rate charge each time the terminal is settled.
As you can see, there are a number of expenses that will be incurred for any standard merchant account. There is absolutely no way anyone can provide you with a free merchant account, because the fees set in place by the issuing card companies have to be paid by someone, and someone else will certainly not be willing to pay for you to use their service at their own cost.
The truth is, these fees would be extracted in another manner, most of which would be indirect and "hidden". And in that light, it's always better to choose a company that clearly discloses its fee structure up-front, instead of being "lured in" under the premise of getting something for "free" - only to find yourself the victim of an endless barrage of hidden charges...
Though they're hard to find, there are a few merchant services that provide a great pricing plan with a low-cost fee structure. You'll be far better off looking into those types of offers, instead of chasing after the "free offers".
Bottom Line: Free merchant accounts don't exist.
It will cost you money to process credit card payments, one way or another. Always read the fine print (the terms and conditions), and realize that most merchant service providers that advertise something as being "free" will make their money by locking you into a steep contract of some kind - most of which are enforced with a steep cancellation charge.
So do your due diligence, and look for reasonable, realistic merchant account fees that make sense for your business needs.
Because an unusually "cheap" merchant account will almost certainly end up being an incredibly expensive mistake...
Related Tags: merchant account, credit card processing, merchant accounts, accept credit cards
Chris Rempel highly recommends http://www.AcceptByPhone.com, which enables anyone to accept credit cards using any touch-tone phone (or cellular) for a FRACTION of the regular cost.
Additionally, click the link to discover how to find the best credit card processing rates for your business.
Recent articles in this category:
- Planning A Childs Party
Birthdays are an exciting time for children, each year they want bigger and better parties so it is - Online Diwali Gifts Shopping Experience
India is a country of festivals. India is truly secular country and enjoys each and every festival e - E-commerce To Engine Wealth!
It is a fabulous experience to have technology at your side to leverage its advantage to boost the b - Diwali Is Celebrated Wholeheartedly Over Five Days
The Five days of Diwali is celebrated over five days in most of North India. All the days except Diw - Create Online Store With Ebay Integration - Get It Ready In A Minute
There are ecommerce websites operational with their 'Create Online Store' feature to help users get - Methods To Make Extra Income Working Online
With the current economic situation and problems many people are looking for ways to earn extra mone - Earn Extra Money Online Anytime, Anywhere!
Has the economy got you down to the point of no return? You have looked everywhere for a part-time j - New Credit Card Validation Service - Issuer Identification Number (iin) Database Lookup
Issuer identification number (IIN) - The first six digits of the credit card number are known as the - 5 Tips To A User Friendly Ecommerce Web Design
Design of a website plays an important role to attract more number of visitors to it. An eye catchin - Find Out On When To Offer Your Gadget And Get Your Money's Worthy Of
Let's face it , all gadgets can become outmoded within just a year or 2. A brand new version will be
Most viewed articles in this category:
- 3rd Party Merchant Accounts: Tips To Avoid Costly Chargebacks For Merchants And Buyers
Accepting credit cards online can be the most important decisions you can make to make money from - Gateway to India - a New Way
Internet craze seems to be catching on in India . From a low internet user base of about 1.4million - Accepting Credit Cards - Is It Necessary For Your Small Business?
This almost seems as if it is a rhetorical question nowadays. Customers all seem to use their credit - Important Internet Marketing Tips
There are 10 tips that are helping you to lead your site high: 1: Insulate yourself against t - What Makes Adsense Work
What does make Adsense work - there are as many ideas as there are theories. Some maintain i - I'm Going to Use Oscommerce - Now What?
When you decide to go with osCommerce for your e-commerce site, you can simply take their stock layo - Some Tips On International Business Marketing
Are you planning of economically expanding outside the borders of your native land? Are you thrilled - Why You Need An Ecommerce Merchant Account
You must obtain an ecommerce merchant account in order for your web site to be able to take payment - Monetize Blog - Learn the 4 Methods to Make Money From your Blog
There are many ways to make money on the internet, one of that is to monetize blog. Your blog is wha - Modeling Success
I am on a lot of mailing lists, and like to keep track of what's happening in the Internet M