Some Merchant Account Providers take advantage of their customers and charge unnecessary fees. In part two of this series, we will identify seven unwarranted merchant service fees your provider may be charging you.
7 Merchant Service Fees Charged by Unethical Providers
Payment Card Industry (PCI) Compliance Fee
Self-Assessment Questionnaire (SAQ) Fee
Address Verification System (AVS) Fee
Next-Day Funding Fee
Bank Service Fee
Providers use this merchant service fee as a revenue stream if your business is categorized as non-compliant. This fee can be imposed yearly, monthly or both, depending on your provider. It does not serve a purpose beyond reminding you that your provider has no verification of your business's compliance. Fair providers guide businesses to take the necessary steps to be compliant, rather than penalize them.
Similar to the PCI compliance fee, the SAQ fee is imposed if your business fails to complete the SAQ to verify its compliance. This merchant service fee is typically charged yearly, however — if your provider is a stickler — you may get charged quarterly or even monthly until the SAQ is submitted.
Trustworthy providers don't charge for this or even require the SAQ to be submitted. The SAQ is meant to be a self-assessment of your business (hence the name) — not an evaluation by your provider.
This merchant service fee is charged to run the AVS to match the address provided with the address registered with the card. It is charged for every transaction where the AVS is run, even if the transaction is declined. This fee should not exceed $0.01 per transaction. However, as you can see below, the provider is charging 10 times the true cost.
Some providers will charge a merchant service fee for next-day funding, which is sometimes considered an accelerated funding time. This is typically a flat dollar amount charged monthly. It does not cost your provider any money to provide next-day funding, so there should never be a charge for it on your statement.
Your business could incur a merchant service fee for not taking transactions within a certain time frame. Different from a minimum-processing fee, which is charged to cover the cost to keep a merchant account open with the processor your provider works with, this fee is yet another money maker for your provider. A fair provider would check with you to see if the account is still needed, instead of billing you until you notice.
Providers are legally required to report each customer's revenue to the IRS, though some charge a merchant service fee to their customers to report it. This is, yet again, another way for providers to make an extra buck.
Some providers add in a generic “bank service fee” that further pads their profits. The terminology is vague. What service does this fee cover? Is this a pass-through fee levied on your provider by the bank?
Considering how many fees seem to be included monthly or quarterly in a business’s merchant statement, it’s easy to see how providers get away with masking this additional monthly fee as something legitimate.
Remove Unnecessary Fees From Your Statements
Unfortunately, it's easy for providers to hide fees from you due to the complexity of merchant statements. Review your current merchant statements and see if you can spot any questionable fees. If your provider is charging you unnecessary merchant service fees and refuses to drop them, then it's time to switch to a reliable provider. By confirming that you're paying fees that are necessary, you can save your business a lot of money in the long run.
Have you worked with a provider that charged you unnecessary fees? What types of fees did they charge? Don’t hesitate to share in the comments section below.