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The Curious Bag
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Merchant services work by allowing a merchant to accept credit card payments from customers by way of a merchant services account. The merchant pays fees based on the number and dollar amount of transactions in addition to paying a monthly fee.
Payments Credited
Payments processed through merchant services are typically deposited directly into the merchant's bank account within one to three business days following the transaction.
Fees Debited
Transaction fees, discount rates and monthly fees are typically deducted directly from the merchant's bank account as well.
Transaction Fees
The transaction fee charged for each transaction is generally low, around 30 cents each.
Discount Rate
A discount rate is charged based on a percentage of the sale and varies depending on the card issuer. MasterCard and Visa are generally the lowest while American Express and Discover typically have higher discount rates.
Variable Discount Rate
Discount rates vary further depending on if the credit card number is keyed in (taken over the phone, online or by fax) or the credit card is present and swiped at a terminal. For instance, a keyed in rate may be 2.9 percent while a swiped rate may be 1.9 percent.
Monthly Fees
Monthly fees are generally fixed by the merchant service provider to cover account maintenance.
Source:
Merchant Account Services: Guide to Merchant Account Services
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