A setup fee is a nominal amount charged by a merchant account service provider when a merchant account is established. This fee has normally been charged at the point in the process when a new merchant submits an application, but the charging of such fees is no longer common among most providers. In fact, many merchant service providers waive the setup fee, the application fee, annual fees, AVS fees and various other fees in order to gain more accounts. Usually, transaction fees, discount rates, gateway fees and monthly minimums fees more than cover a merchant account provider’s administrative costs, especially the small amount required to establish an account.
When setup fees are charged, they are only charged once at the beginning of the merchant account setup process. These fees range anywhere from as low as ten dollars up to a few hundred dollars, and can in some cases approach a thousand dollars. The precise amount depends on the kind and/or complexity of the merchant account and what benefits ultimately attach to it.
The Setup Process Itself
Businesses that wish to accept major credit cards – such as Visa, MasterCard, American Express or Discover Card – for sales transactions must, of course, first establish a merchant account with a merchant service provider. If part of that process requires a setup fee for the merchant account, it is often worth the cost in order to accept credit cards. It is, however, advisable to shop among various providers, or even seek third-party merchant service providers that offer credit card services while waiving such fees. You may, however, end up paying more through higher rates and other fees.
When it comes to setting up a merchant account, the fees that are charged can quickly become puzzling and overwhelming. Different fees are used to pay for different operations. Additionally, there are fees that are charged at different times in the overall transaction process.
Therefore, when a merchant decides upon a merchant account provider, it is important to ask specifically about what fees the provider charges and how much each fee will ultimately cost over time. It is important to shop around for a merchant account provider because the costs can vary a great deal. Sometimes, if you can combine services with a merchant account provider, you can get a break on some of the fees, including the setup fee.
In some cases, if a merchant goes with an account provider that offers an assortment of integrated solutions, that merchant might have setup fees waived, particularly if the merchant receives another service from the provider. It can be a good idea to look at what you are being charged for other services and see if switching to a single provider can save you money.