What Fees Are Typically Associated With A Merchant Account?

Here’s an overview of the common fees you can expect:

Transaction Fees

These are fees charged every time a payment card is used.

They usually include:

Interchange Fees

Paid to the card-issuing bank, these fees compensate for transaction handling and risk. Interchange fees vary depending on card type (credit, debit, premium), transaction method (in-person or online), and card network (Visa, Mastercard, etc.). For example, average interchange fees in Canada are around 1.81% of the transaction, but total fees can be about 2.3% including other costs

Assessment Fees

Charged by card networks like Visa or Mastercard, usually a small percentage of the transaction amount (~0.08% to 0.10%)

Payment Processor Fees

Some payment processors (or acquirers) charge a fee, often a percentage plus a flat fee per transaction (e.g., 2.5% + 30¢). This covers their services and profit margin.

Monthly and Recurring Fees

Merchants may be asked to pay ongoing fees such as:

Monthly Account Fees

For maintaining the merchant account.

Payment Gateway Fees

For e-commerce businesses, fees for the gateway connecting the online store to the payment processor.

Terminal Rental Fees

For physical point-of-sale terminals in bricks-and-mortar stores

Other Fees

Chargeback Fees

When a customer disputes a transaction, merchants may be charged a fee to handle the process.

Setup or Equipment Fees

Initial costs for setting up the account or purchasing/renting equipment.

Early Termination Fees

If a merchant closes the account before the contract ends.

Incidental Fees

Such as statement fees or batch fees.

Surcharges and Convenience Fees

Merchants in Canada (except Quebec) may optionally add a surcharge on credit card transactions to cover their costs, but only up to a maximum of 2.4% and must clearly disclose these fees to customers before payment. Some networks do not allow surcharges on prepaid cards or debit card transactions.

In summary, the major fees for Canadian merchant accounts include interchange fees, assessment fees, processor transaction fees, and various monthly or incidental fees.

The total cost usually ranges around 2% to 3% per transaction, but this varies based on payment method, provider, and business type. Transparency and understanding these fees can help you manage and potentially reduce costs effectively .