Figuring Out Merchant Account Costs

Understand how to calculate merchant account costs so you can choose the best merchant account.

Any one who is considering opening up a merchant account for their business, website, or both need to be able to calculate the cost of a merchant account. This will help you to evaluate if a merchant account is right for you as well as budget for the new expense. However, since opening up a merchant account allows you to accept credit and debit card purchases, almost all businesses find the costs of a merchant account are far lower than all their new business.

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1. Estimate your monthly credit card and debit card total sales amount and number of purchases

This can be a tricky process for some businesses, especially if you have never accepted credit cards before. If you have, simply take the average number for credit card sales over the past three months. If you haven't and are an in person business, you can estimate that 50% of your sales will be from credit or debit cards to get an idea. If you are an online business, assume 100% of your sales will be from a credit or debit card.

2. Multiply your monthly by the average discount rate for the merchant account

Once you have an estimate of your monthly credit and debit card sales for your merchant account, multiple that number by the average discount rate. You will get this number from a merchant account company through a free quote. You can also call Merchant Warehouse at 1-866-734-8450 to get a free quote and average discount rate.

3. Multiply the total number of sales by any applicable transaction fee

Additionally, many merchant accounts charge a transaction fee that also needs to be included to calculate the cost of a merchant account. The transaction fee is charged per transaction regardless of the amount of the sale. This number can be between $.01-$.50 in most cases. To understand the cost of transaction fees, multiply the number of sales by the transaction fees.

4. Add those numbers together

Then add the numbers you got in step 2 and step 3 together to calculate the merchant account cost. This will be the bulk of the fees you pay to have a merchant account.

5. Add any additional fees including monthly maintenance fee, reporting fees, daily batch processing fees

Finally, add any additional fees that may be charged for your merchant account to calculate the cost of a merchant account. These could include monthly maintenance fees, reporting fees, and daily batch processing fees. You can call 1-866-734-8450 if you would like to have a customer service representative at Merchant Warehouse help you calculate costs for free. There is no obligation to sign-up, we have just found them to be very helpful to calculate the cost of a merchant account.

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