Merchant Account Costs


Equipment Costs
Credit card processing equipment costs depend on your requirements. Businesses that process cards online won’t need any equipment at all–credit card processing software takes the place of a magnetic swipe machine or card reader. If you’re processing cards at a retail store or a business where cards will be physically present, you’ve got a few options:

Magnetic swipe machines are probably the most common piece of credit card processing equipment. Charges for swipe machines are lower than those for online transactions or “keyed” in transactions, where a customer places a phone order–the physical presence of the card makes the transaction easier to verify and cuts the risk of fraud. You can also use a swipe machine that is integrated into a POS system, eliminating the need to purchase or lease a credit card terminal. Magnetic card readers can cost up to several hundred dollars to purchase.

Mobile terminals use a wireless internet connection to transmit payment information. You can use mobile terminals within a store or at different locations, such as trade shows, concerts or community markets. Using a mobile terminal is a convenient and reliable method of collecting customer payment, but the terminal equipment itself might be more costly. Merchant service account providers should be able to tell you more about your options when it comes to portable or mobile terminals.

Credit Card Processing Software
Credit card processing software, which takes the place of a credit card swipe terminal, can be purchased or “leased” from a hosted software provider. Purchasing the software allows for a higher level of customization, but might require more management–you’ll need to perform upgrades and maintenance yourself. Hosted software is maintained and updated by the provider regularly, and is available for a lower initial cost than purchased options–you’ll pay a monthly rate to use the software for credit card processing. Hosted software is more difficult to customize and allows you less flexibility in terms of control and use.

Service Costs
The majority of the costs associated with credit card processing are service charges–merchant account providers typically charge a fee for each transaction. The per-transaction rates depend on several factors: the “risk” level of your business, past transaction volume and how the card information is collected. For example, fees transactions made using a credit card terminal ( are typically lower than those for “keyed in” or even online transactions. Rates can vary, but typically range from 1 to 3% of each transaction amount.