A: If you think your statement is written in greek or uses math derived from a parallel universe, you’re not alone.

The truth is that there are really only 5 fees which are legitimate, by that, we mean, necessary, i.e.: based on actual expenses.

1. 1.Annual Fee (not to exceed $25)
   

2. 2.Statement/Online Access Fee (< $10)
   

3. 3.Discount Rate + Surcharge or Rebate
   

4. 4.Per Item Fee
   

5. 5.Chargeback Fees
   

Annual fees help cover tax reports, insurance, PCI compliance, association memberships and network access fees. This should not exceed $25.

Statement fees cover the merchant account statement to be mailed to you, or if you’re paperless, for online internet access to maintain realtime reports.

Your Discount Rate (D.R.) is a fixed rate for all transactions expressed as a percentage. Basis Points (bp, bips) are simply hundredths of a percent.

Your discount rate may be either Gross or Interchange Plus.

You may have a D.R. of 2.38% (also 0.00238 or 238 bps), which is a Gross base rate when your customers use a normal, consumer Visa, MC, D or Amex. OR you may have a D.R. expressed in basis points (0.9% or 90 bps or 0.0009) which refers to your rate above cost. The Cost of the transaction is Interchange. Therefore, if you’re charged based on cost, you have Interchange Plus.

NOTE: Surcharges only apply to Gross billing statements because Interchange Plus lists all card types separately,without reference to other cards. Rebates are given back to merchants when customers pay with a debit card, because debit cards (when PIN not used) carry very little risk (since the funds are immediately charged to customer’s bank account). The processor may or may not pass this rebate on to the merchant. Very often, banks and processors keep this rebate as an extra profit for themselves!

Surcharges on a gross statement refers to the difference between a basic consumer card at its lowest rate (commonly called vanilla or plain card) and the rate of the actual card used. Example: a Visa Reward card is 0.11% more than a basic Visa. Therefore the Visa Rewards ‘surcharge’ is 0.11% or 0.0011.

Per Item (P/I) fees include network access fees (for dialup and high speed authorizations), PIN Debit network fees depending on the customer’s bank or credit union (Issuing Bank) (Examples: Maestro, STAR, InterLink, Cirrus, Pulse, NYCE, Shazam, MAC, Plus, Jeanie, etc.), Gateway P/I fees and Interchange transaction fees.

Chargebacks:  fees incurred when your customer disputes the validity of a transaction (by filing a complaint) with his or her Issuing Bank who then forcibly reverses the transfer of funds. The Merchant may dispute the validity in which case the Acquiring Bank and Issuing Bank shall reach an agreement.

   
There are 4 types of Chargebacks:

1. ➡    Technical - Expired authorization, non-sufficient funds or processing error.
   

2. ➡    Clerical - Duplicate billing, incorrect amount billed, or refund never issued.
   

3. ➡    Quality - Consumer claims to have never received the goods as promised at the time of purchase.
   

4. ➡    Fraud - Consumer claims they did not authorize purchase or identity theft.