Setting up a merchant account can be a timely and complex procedure that comes with a variety of fees. The fees implemented will depend on the type of merchant account that has been set up, and for online merchant processing, the fees are generally higher.
Fees for online merchant processing explained
A merchant account generally has a variety of fees, some that are set by the merchant account provider, and some that are charged on a per-item basis. The fees will vary depending on the circumstances of the transaction, the amount of money being processed and the card type being used.
The fees for online merchant processing are generally higher than offline merchant processing, because there is a greater risk involved. This is because the transactions that are taking place are CNP (Card Not Present) transactions, and therefore the risk of fraud is greater. Because of this, when a client disputes a charge, the bank is far more willing to process a chargeback.
By normal processing standards, all online processing is automatically classed as high risk processing and therefore the fees implemented are generally higher. The merchant is unable to take a customer’s signature, or witness them input their PIN number into a credit card processing terminal. In addition, the merchant is unable to ask the customer to verify their personal information. With online merchant processing, there is a greater potential that fraudulent activity may have taken place, and therefore the risk in place is much greater.