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Credit Card Merchant Accounts

In order for a business to accept credit cards as payment for their goods and services, they must first apply for a merchant account. New businesses with little or no credit may have trouble establishing a merchant account or they may pay higher fees than a business with a better credit history.

The fees are paid by merchants each time they process a transaction using a credit card or debit card. The fees can vary depending on which merchant account provider they use and by the type of transaction. For example, swiping a credit card generally costs less than keying it in manually. And using a business card usually costs less than a regular credit card.

Fees consist of both a fixed fee for each transaction processed plus a percentage of the amount charged. Other fees merchants may be charged with include Authorization Fees, Chargeback Fees and Monthly Statement Fees. Most account providers also charge a minimum monthly fee. If a merchant's fees fail to meet the the monthly minimum, they will be charged the minimum amount regardless.

A fact that many consumers don't realize is that these fees are built in to the price they pay for all of their goods and services. Critics complain that this is unfair to those who pay cash because they are in effect helping to subsidize the purchases of credit card users. They argue that charging credit card users a separate fee would lower prices for those who pay cash, and fairly distribute the extra cost to those paying for the convenience of credit cards.

Of course, credit card companies do not want merchants to charge credit card users more than cash-payers as this would discourage the use of credit cards and eat away at their profits. Indeed, many countries have passed legislation prohibiting this practice on the grounds that it discriminates against credit card users.

It is also questionable why credit card fees should be treated differently than other fees merchants must pay, such as rent, utilities, and insurance. Should a customer who phones his order in be forced to pay a 'telephone surcharge'? This would open up a Pandora's Box of fees and surcharges that would quickly get out of hand.

It seems that the system currently in place is the most equitable for all parties. Credit card fees should be bulked together with all of the other fees a merchant must pay to do business.
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