The Authorization fee (actually an authorization request fee) is charged each time a transaction is sent to the card-issuing bank to be authorized. The fee applies whether or not the request is approved. Note this is not the same as Transaction fee or Per Item fee.
Statement fee
The statement fee is a monthly fee associated with the monthly statement that is sent to the merchant at the end of each monthly processing cycle. This statement shows how much processing was done by the merchant during the month and what fees were incurred as a result.
Many times, the statement fee is not directly linked to "paper" statements but rather general overhead. This means that a provider would not waive this fee if a merchant chose to have a "paperless" statement.
Monthly minimum fee
The monthly minimum fee is a way to ensure that merchants pay a minimum amount in fees each month to cover costs from the provider to maintain the account and to create minimal profits. If a merchant's qualified fees do not equal or exceed the monthly minimum they will be charged up to the monthly minimum to satisfy their minimum fee requirements.
Example: A merchant has signed a contract with a $25.00 monthly minimum fee. If all the fees for the most recent month of processing total only $15.00, this merchant will be charged an additional $10.00 to meet their monthly minimum requirements. Sometimes there are fees that are charged that are not a part of the monthly minimum, such as statement fees. It is industry standard to charge a monthly minimum.
Batch fee
A batch fee (also known as a batch header fee) can be charged to a merchant whenever the merchant "settles" their terminal. Settling a terminal, also known as "batching", is when a merchant sends their completed transactions for the day to their acquiring bank for payment. Some providers perform this automatically. It is important to close a batch every 24 hours or a higher rate will be assessed by Visa or Mastercard.
Customer Service fee
The customer service fee (also known as a maintenance fee) can be charged by some providers to pay for the cost of customer service.
Annual fee
The Annual fee can be charged by some providers to pay for costs of maintaining the merchant's account. Sometimes these fees can be quarterly. The fee can be from $79–$399.
Early Termination fee
The early termination fee can be charged by some providers if the merchant ends the contract before the end of the contract term. While contract terms of 1–3 years are typical, some providers have terms of up to 5 years with a one year prior notice to cancel or the fee will be assessed. Some providers also assess all statement fees and monthly minimums remaining when the contract is terminated. Some providers may also assess a "lost profit" fee based on an assumption of profits they concluded they would have earned during the full term of the contract.
Chargeback fee
The chargeback is the largest risk that is presented to banks and providers. This is not to be confused with a refund, which is simply a merchant refunding a transaction. In the Visa and Mastercard rules, the merchant's processing bank is 100% responsible for all the transactions that the merchant performs. This can leave the provider open to millions of dollars of potential losses if the merchant operates in an illegal or risky manner and generates many chargebacks. The providers pass this cost on to the merchant, but if the merchant is fraudulent or simply does not have the money, the provider must pay all the costs to make the card holder whole. The chargeback risk is the largest part taken into consideration during the contract application and underwriting process. Some banks are much more stringent than others when assessing a merchant's chargeback risk.
If a merchant encounters a chargeback they may be assessed a fee by their acquiring bank. A potential chargeback is presented on behalf of the card holder's bank to the merchant's credit card processing bank. A reason code is established by the card issuer to properly identify the type of potential chargeback based on the card holder's complaint. The most common complaint is that the card holder can not remember the transaction. Usually, these potential chargebacks are corrected when the merchant's processing bank sends over more details about the transaction. Some providers charge a fee for this service, known as a "Retrieval Request". A chargeback can also be related to a fraud or similar dispute that the card holder is claiming to the merchant. This fee can be charged by some providers whether the chargeback is successful or not and is not dependent on the amount of the chargeback.
Currently both Visa and Mastercard require all merchants to maintain no more than 1% of dollar volume processed to be chargebacks. If the percentage goes above, there are fines starting at $5000 – $25,000 to the merchant's processing bank and ultimately passed on to the merchant.
In all cases, a chargeback will cost the merchant the chargeback fee, typically $15–$30, plus the cost of the transaction and the amount processed.
Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS was created by the Security Standards Council as a set of rules merchants must adhere to in order to reduce fraud throughout the industry. The goals of the PCI DSS Standards and corresponding rules are as follows:
• Build and Maintain a Secure Network
• Install and maintain a firewall configuration to protect cardholder data
• Do not use vendor-supplied defaults for system passwords and other security parameters
• Protect Cardholder Data
• Protect stored cardholder data
• Encrypt transmission of cardholder data across open, public networks.
• Maintain a Vulnerability Management Program
• Use and regularly update anti-virus software or programs
• Develop and maintain secure systems and applications
• Implement Strong Access Control Measures
• Restrict access to cardholder data by business need-to-know
• Assign a unique ID to each person with computer access
• Restrict physical access to cardholder data
• Regularly Monitor and Test
• Track and monitor all access to network resources and cardholder data
• Regularly test security systems and processes
• Maintain an Information Security Policy
• Maintain a policy that addresses information security for employees and contractors
For any questions or to clarify these explanations please contact Naples Merchant Services
239-449-6040
Naples Merchant Services
239-449-6040
888-601-0801 fax
info@naplesmerchantservices.com
http://www.naplesmerchantservices.com/
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