Merchant Accounts 101

Posted on 11/30/15 1:57 PM by Ashley Wood

Merchant_account.jpgMerchant Account:

A merchant account is a type of bank account. Its sole purpose is to enable your business to accept payments by credit cards and e-checks securely and efficiently.


One component of any merchant account is the electronic “gateway” it uses as a verification tool. Every time your business processes a card payment from a customer, the gateway verifies on the spot whether or not the transaction is safe to accept by electronically contacting your customer’s credit card company and verifying that the card is active, has a sufficient balance available, hasn’t been stolen, and isn’t expired.

Credit card processing fees can vary from one merchant account provider to the other, so it’s always useful to shop around

Monthly fees

Gateway fees:

Fixed or fixed + variable Example: $1 per transaction or 3% + $0.30 per transaction

Management fees:

5-10$/month for access to their online portal to manage transactions and generate reports. Reporting is sometimes associated with its own

PCI Compliance Fee 5-10$/month, essentially to keep the gateway secured.

Some merchant account providers also charge additional fees during months when you process no transactions or when you have processed less than the monthly minimum you committed to.

Per Transaction fees

Discount fee & per item fee:

These costs are set by your merchant account provider. The discount rate is usually between 0.5% and 0.9% of each transaction.

Interchange fee: 

Based on the type of card. The same regardless of which merchant account provider you use. A credit card might have an interchange rate of just 1.79%. Meanwhile, a feature-laden platinum rewards cash-back card might deduct a heftier interchange fee of 2.9%. This basically means there is no way to exactly predict what you will pay in monthly interchange fee.

Things to consider:

  1. Watch out for hidden fees

  2. Ask about fees for monthly transaction minimums.

  3. Ask about portal access fees and PCI compliance fees.

  4. Some merchant account providers will also charge you additional fees for a “vault” if you want to allow your customers to pay in instalments because they will need to store the credit card numbers. Several merchant account providers will do this for you for free!

  5. Verify that the merchant account provider is fully Payment Card Industry (PCI) compliant.

Benefits of using an Amilia partner for your merchant account:

  1. You’ll receive an extra level of customer support and training through your software provider that you wouldn’t normally have access to.

  2. No long-term contract with the merchant account provider (most of them have 3 year terms)

  3. NO monthly fees whatsoever. Amilia covers all these for you.

  4. NO Interchange fees.

  5. NO vault needed to store credit card numbers.

  6. Predictable merchant account charges: simply a discount + transaction rate!



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