Credit card processing companies charge various fees for their services. Some of the fees make sense as they add value to the customers while some could be just a sham. Seeing frequent entries of fees with vague names in the monthly transaction statements can be very annoying for merchants. Understanding the purpose of the various kinds of fees helps merchants judge their worth and accept them without qualms if they are genuine.

The usual types of fees charged by credit card processors are explained below:

Application fee
Some credit and debit card processing companies charge an application fee. This fee is unnecessary and can easily be done without. Reputed processors do not levy this fee as they make sufficient profit by processing the large volume of transactions of the business account.

Startup fee
Setting up a credit card processing account needs certain processes to be set into motion. Amount charged by credit and debit card processors varies but a setup fee of around $25 is quite reasonable. The amount is worthwhile if the setup works well.

Statement fee
Credit card processing companies send out a statement to the merchants at the end of each billing cycle. The statement contains important details such as the number of transaction, and the time and date stamps of the swipes. This information is useful to merchants as it provides data for analysis and decision-making. Credit and debit card processors generally charge a monthly fee of $7-$10 for the statements.

Monthly minimum fee
Credit card processing companies need to make profit at all times to maintain their operations. They fix a minimum fee per month to ensure some revenue in dry spells. This is specified in the contract. Credit processors charge a percentage of the value of each transaction. If the amount falls below the monthly minimum, the agency will collect the minimum fee from the business.

Discount rate
Credit card processing companies charge a percentage of the transaction amount. This is the primary fee, and it generally ranges from 1.5% to 2% per transaction but could be as high as 5% for some contracts.

Charge back fee
Sometimes, the sale on a credit card is returned and amount has to be refunded. A business may have to pay a fee if the charge backs are very frequent. Usually, the fee is only charged if the count of charge backs exceeds a certain number allowed in a month.

Gateway fee
Gateway fees apply to businesses that use ecommerce applications to sell their products and services. The card processor provides services such as a basic web site, a shopping cart application and a system that allows the business to accept and verify online credit payments. Gateway fees may cost around $10 per month.

Termination fee
Credit card processors have contracts of 1-3 years with businesses. Early termination of the contract incurs a fee of $100-$300. Many agencies do not levy this charge, but the costs of other services may be higher than most.

Credit Card Processing companies need to charge a fee to stay in business. The total fee paid out to a processing agency should not exceed 2% of the total credit sales of a business. This is a reasonable figure that works for both businesses and credit card processing agencies.

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