Application, setup and equipment fees

Selecting the right payment processor has lot to do with your business type. While price is certainly a prime consideration, merchants should consider other important factors:

If you are a new merchant or an existing merchant looking to make a switch, you are likely to encounter several start-up fees. Some payment processors will charge application fees to cover the physical cost of processing the application as well as determining the underwriting risk associated with the merchant. These fees can run between $100 and $300, and in most cases are non-refundable – even if the merchant is not accepted.

Once accepted, merchants may encounter any number of start-up costs. If the merchant is processing face-to-face (card-present) transactions, then the largest cost is likely to be the credit card terminal. In most cases these are free-standing devices that “dial-out” using a phone line or the Internet. For more information see Switching Payment Processors. These devices generally cost between $100 and $500 depending on age and functionality. Merchants may purchase the devices, or lease them their processor or third-party leasing companies. Once obtained, the terminals must be programmed; however your processor will generally do this for free.

Card-Not-Present (CNP) merchants (mail order, telephone order, Internet) have three options with associated costs. Small merchants may consider using a standard credit card terminal and “key enter” their transactions, although this will become burdensome for merchants with more than 25 transactions a day. Another option for small to medium sized merchants (up to 250 transactions/day) is to purchase PC-based “virtual terminal” software. Packages such as ICVerify® (First Data) and PCCharge (VeriFone) are inexpensive, and can pack a lot more functionality than a physical terminal. This software is generally available for between $150 and $250.

Generally speaking large merchants are better off connecting directly to their processor by means of shopping cart software, Order Management Software (OMS), or an Application Programming Interface (API). For more information see Switching Payment Processors. In this case, merchants will encounter internal costs associated with purchasing the necessary software and development costs related to the integration of the software. In some cases, your payment processor may charge for work associated with integration and testing. Always be sure to determine in advance what fees, if any, your processor will charge you for integration work.