What is a monthly minimum fee

What is a monthly minimum fee

A monthly minimum fee is the amount charged to a merchant by a merchant provider. A monthly minimum fee is implemented in order to ensure that any merchant that signs up as a processor is guaranteed to meet the acquiring bank’s requirements.

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Monthly minimum fee explained

A monthly minimum fee is an amount that the merchant is required to generate each month, as part of the merchant account agreement. Most merchant account providers charge a minimum monthly fee in order to maintain the merchant account. Typically, the amount is relatively low, and was originally introduced to allow online processors to accept smaller clients without having to charge them monthly maintenance fees.

In order to maintain a merchant account agreement, the merchant will be required to meet the minimum monthly amount every month. If the minimum amount is not met, the merchant will be charged the difference in order to keep the account. The monthly minimum fee is the amount that a processor must take from a merchant, in order to cover the costs from the provider to maintain the account and to make a profit from them.

Larger merchants who regularly process more than US$1000 per month are less affected by a monthly minimum fee, as their transactions consistently exceed the monthly minimum fee.