If you have a merchant account already or shopping around, there’s several different fees on a merchant account application. Knowing what they mean, and which ones you can negotiate, is the key to getting the best deal. If you call your merchant provider and they don’t drop at least $100 a year in fees, I’d shop around. This is especially true if they say “the bank won’t lets us drop any fees” because in that industry, almost everything is negotiable because it’s so competitive. This is a breakdown of the industry standard fees:

Monthly Minimum: This is the minimum in fees you pay each month. If you’re doing about $1,100 a month in volume then this fee won’t be an issue. If it’s much less volume, then the difference is charged to bring it up to $25.

Annual Fee: This is one the banks charge but I know one place that waives it if you ask. If you’re doing very little volume, then ask for the monthly minimum to be waived. If over  $1,100 a month, get the annual fee waived.

Chargeback Fee: This is typically $25 and shouldn’t be more than that (never heard of it being higher). It’s when a customer disputes a charge and wins it. An example is if they wanted a refund within the refund policy but someone didn’t give it to them, or they got a wrong or damaged item and didn’t get a replacement. You also get charged these if you take a fraudulent order.

Voice Authorization Fee: These are if you call your processor and do the transaction over the phone. It’s pretty rare to do this if you have software, a terminal, or a gateway.

Return Draft/Check Fee:  This is if you accept checks and one bounces from a customer. If you have a check guarantee service then it won’t apply, the guarantee place will cover the check. Newer terminals can swipe actual checks with optical recognition, so you can swipe them just like a credit card. It’s quicker to do this, but also the money is ACH transferred a lot faster into your account with this method than taking it to the bank.

Statement Fee: This is for the overhead in making up your monthly statement. I’d highly recommend (if you have the option) to do a “Green Statement” which is online instead of having your statement printed and mailed. It’s usually a lot less per month, and you can download your statement into an accounting program which helps at tax time. If you have an accountant, they probably would prefer the electronic version of your statements anyway.

Application Fee: This one is for running credit reports and the initial footwork in taking an application. Some places say it’s waived, then make up for it elsewhere (like a higher rate or transaction fees). It can be negotiated most of the time, the real risk they take is if they go through the application process and you’re turned down. If you have decent credit, not on the match file, and no foreseeable problems with getting qualified, you have a much better bargaining position to get this waived.

Early Termination Fee: If you currently have a merchant account and switch to another processor that has a better deal, many places charge some kind of fee. It’s really important to look for a place where it’s a fixed amount, not some huge penalty based on percentages of your volume. Also, you can negotiate to have your new processor pay this fee to get you to switch to them. Only a few processors like this one do that. Also, you have to ask for it most of the time.

Discount rate: This is more of a big deal if you do a high monthly volume. There’s several different rates depending if you swipe the card in a terminal (less risky so it’s lower) or take a phone or Internet order (card not present rates are higher, as there’s greater risk). It’s really important to know if you’re getting an introductory “teaser rate” which is one that is really low for six months, then rockets upward later. Anytime you see a place quote you a rate without you applying first, it’s a teaser rate. These are similar to adjustable rate mortgages and should be avoided at all cost.

Transaction Fee: This is much more important if you’re average transaction is low and you do a lot of them. It’s the fee for each transaction you do. If you do few transactions, and the average ticket price is really high, then bargain for a lower discount rate. Always focus on whichever of these two will save you the most money.

When trying to get the best deal, the most important thing is going to be your agent though. If they aren’t a merchant account underwriter, they’ll be too far down the chain to help since an extra layer of residual commissions have to be tacked on to whatever you get. Also the person has to be ethical.

I’ve worked with several people in that business doing Internet promotions and run across some thinly veiled used car salesmen who are just out to stick it to people. It’s why I recommend MST, they are an executive merchant account underwriter with several major banks. You can call then at 800-715-8053 and they specialize in reducing the rates and fees of existing businesses. You can also contact him online with a quote request at this secure form. He told me it’s really easy to save a business money, because most of the agents doing this use teaser rates which have since expired and the merchant is unknowingly paying way more than they should be.