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A merchant service fee is a cost levied by a third party to process a payment from the customer. The merchant that processes the price is often unaware that it will have to pay these fees because processors must disclose them before signing up for an account. However, these fees may come as quite a surprise when they appear and can cause unexpected headaches for the business owner.

Where to Find Them

Merchant fees can appear in a variety of places. When looking for merchant service fees, the best place to start is with the merchant service agreement the processor has presented to you. This is often the most informative and detailed explanation of where these fees are hidden. Additionally, separate merchant agreements may also govern this information depending on which kind of account your processor has set up for you.

Common Terms

When reading through any of these documents, keep an eye out for the following terms: interchange, assessment, and pass-through. These are all fees you can expect to pay as a merchant. The first two terms are usually related to a credit card transaction, while the last is more related to a debit card transaction. These fees will vary based on your payment acceptance method and the type of card used, so it is essential to understand what they are.

Things You Need to Know 

1. These Fees can Vary

Because there are three separate fees you can be charged, it is common for these fees to differ for each of your accepted methods and the various forms of payment you get. To do this, processors pay banks and credit card associations a fee every time a payment transaction takes place. Depending on where you are located, the size of your business, and how much you charge per transaction, additional fees may also be levied against you.

2. It’s Illegal to Hide Them

In the past, it was common for a merchant services provider to hide some or all of these fees from their customers to come in at a lower price. However, this practice is illegal, and processors must disclose these fees before signing up for an account. While this is true, it may need to be clarified as a full breakdown of where your money will go as a merchant.

3. These Fees are not Passed Through Manually by Your Provider

While many assume that if their provider does not charge them for these fees, they will not be passed through, this is only partially true. If your processor does not charge you for these fees, those funds will be made available to you as soon as the transaction is completed, and the money from those charges will be taken from the funds you have available in your account. However, if these fees are included in your payment plan, they must be paid in full at the time of each transaction.

4. You Must Pay for Fraud Protection

As a merchant, you can claim additional funds from your processor if your card is lost or stolen. If someone uses your account without permission, they will be charged a fee of up to $50 per order as long as they do not provide adequate identification. You may also expect to cover these fees on all credit card transactions in which more than 50 cents are charged to the same card from five merchants within an hour.

5. Extra Fees May Apply if You Exceed Your Monthly Limit

As a merchant, your processor may require you to pay for any fees resulting from exceeding your approved limits. These may come as additional monthly fees or a surcharge on the transaction. However, when these extra services are requested, the customer service team for your processor must provide solid proof that they were unaware of the reason for these charges and that they are not placing restrictions on your usage.

6. Your Processor Likely Has a Lot of Control Over How You Run Your Business

While your processor may not be responsible for determining how much you charge for your goods and services, you will owe fees determined by them for all succeeding transactions. If your processor disapproves of your business model, they may restrict your usage or deny you an account altogether.

7. Automatic Discounts are Only for Large Businesses and Accounts That Frequently Have No-Shows

Though you may expect to receive a discount for being a prominent or established merchant, your processor may choose to only offer one based on their own rules or those of your bank. Since this is the case, purchasing your services at the lowest possible price is best, and paying your monthly fee in full as soon as each transaction can be completed quickly.


It is essential to understand that fees are a fact of life for any merchant and should be expected regardless of how small or large your business may be. While you can find all the details about these fees online, it will be up to your provider to explain them thoroughly before signing up for an account. This means that it is essential for you to ask questions about each one of them so you are fully informed about what these fees will look like when they do come due, as well.