In order to successfully enter into a Merchant Service Agreement, it is essential that you have adequate knowledge of the terms involved.


My contract turns to a month to month after my contract term is over Wrong! Some contracts will renew automatically for another term. Typically if you are in a contract you will have to give 30 days written notice that you are opting out of the service at the end of your contract date.

My bank offers me better rates and services Wrong! Don’t assume a big bank is either better or more ethical or has less costs. Most big banks outsource all their services which can result in higher fees.

After my lease contract is fulfilled, I will own my machine Wrong! First, unless you are extremely tight on initial start up money don’t sign a lease! A lease agreement locks you into a term of payments, typically 3 to 5 years, and when the term is fulfilled you have to pay a buy out or give the machine back. The buy out is almost what the machine cost in the first place. You can end up paying thousands of dollars for a machine that probably cost a few hundred in the first place. You can not get out of a lease after it is confirmed!! This is the number one horror story I hear about!! They will lead you to believe it is a rental or they tell you after the contract is finished you own it. Not true!! Some miscellaneous fees you may see on your statements are shown below. These fees are not bogus. They are legitimate costs that are incurred on a merchant account.

  • Authorization fees (or transaction fees) are typically from $.19 to.30. These are typical costs associated with any merchant account.
  • Batch fees are costs that associated with closing the terminal out. This fee is a way to generate revenue on an account. The cost to the provider is minimal but it is a revenue generating stream.
  • AVS is an address verification system fee. Your account has to be set up to run AVS. If you aren’t inputting the address into your terminal but getting charged this fee you should check with your provider. Again, this is a revenue generation stream for the provider. The cost to the provider is minimal.
  • Decline fees There are providers out there that will charge you for a transaction getting declined. Decline fees can be costly for online merchants because they tend to have more declined transactions due to fraudulent attempts. This is a additional source of revenue for the provider but the cost to them is minimal.
  • Voice authorization fees Providers will charge for a voice authorization or an automated authorization because your terminal is down or the card won’t go through. Again, another source of revenue to the provider but the cost to them is minimal.

Monthly minimum fees are based on gross processing volume Wrong! This fee refers to the fees paid by the merchant to the provider. They don’t refer to the volume on the account. For example, if a merchant has a monthly minimum fee of $20, the merchant must accrue at least $20 in fees or they will be charged the difference between their actual fees and the $20 minimum fee. Besides the true processing charges, the transaction fee (authorization fees), statement fee, PCI compliance and possibly a monthly minimum charge the rest is just ways to generate revenue. I’m not saying these fees are wrong, I’m just saying be informed! They can be used to negotiate your contracts. Buyer beware! Don’t be one to get caught up in the gimmicks and scams!



2022-08-13 20:30:00