Business owners who maintain a merchant account for processing credit and debit cards often find their biggest frustration is trying to understand their monthly merchant account statement (link to comparing rates) and determine exactly what their fees are each month. Part of the confusion is due to merchants often assuming the only fee that they need to worry about is their qualified discount rate.

What many merchants don't realize is that in addition to the qualified discount rate for Visa and MasterCard transactions, the following fees are also assessed on a merchant account each month: 1) per transaction fee; 2) mid qualified discount rate; 3) non qualified discount rate; 4) monthly statement fee; and 5) ACH or Batch fee. Depending on the processing company you choose you may also be charged one or more of the following: 1) monthly minimum; 2) annual fee; 3) monthly fee; 4) merchant club fee (supplies); 5) early cancellation fee; 6) equipment fees; or 7) fees for customer service calls.

The best way to figure out what you're actually paying each month is to divide the total amount of fees listed on your merchant statement by the total volume processed that month. For example, if there is a total of $80 in fees and the monthly volume processed is $2,000 then divide $80 by $2,000. You will get 0.04, or 4%. This means you paid about 4% of your total credit card sales to process credit card transactions. The total amount paid on the total volume processed is referred to as the effective rate.

Typically, merchants should expect to pay an effective rate of about 2% of their total credit card volume each month if they swipe a majority of their transactions and 2.5% if their transactions are mostly keyed-in. The effective rate includes ALL fees assessed on the merchant account each month, such as statement fee, per transaction fees and downgrades in addition to the qualified discount rate.

If a merchant signs a contract with a merchants services provider for a qualified discount rate of 1.69% this does not guarantee that this is the only amount the merchant will be charged each month. For example, a merchant who has a qualified discount rate of 1.69% but only sees 20% of their transactions processed at that rate will end up paying significantly more than a merchant with a qualified discount rate of 1.79% that sees over 80% of their transactions processed at the qualified 1.79% discount rate.

To find the best deal for your business it is important to look at all the fees that will be assessed on your merchant account. Don't be afraid to ask processing companies questions and learn about your merchant account. After all, it is your money that you're talking about! So remember, the goal is to look for companies that offer merchants free, no-pressure rate comparisons and statement breakdowns.