Statement fees – What are they?
A statement fee is exactly what it says on the tin: a monthly fee that your bank charges you to send a statement of your account to you in the mail.
Your merchant account will come at considerable expense and you need to be prepared for the charges and fees that will come with the convenience of being able to take payment by credit or debit card. If your business sells online you don’t have a choice anyway.
Understanding how these charges and fees work will make it easier for you to plan profit margins and to decide how much you will charge for products and services paid for by card. In fact, some merchants add a surcharge to any purchase amount, if a customer decides to pay with a credit card though you probably won’t get away with this if you have an online store.
Fees can occur monthly, daily or per transaction. Statement fees are an example of a monthly fee. You won’t necessarily be able to have a statement fee waived if you request online statements; your merchant account provider is likely to charge you that fee anyway whether you seek a printed, mailed statement or an electronic version.
Another example of a monthly fee is the equipment rental fee. If you have a physical store presence, you would probably be using point of sale credit card terminals and quite a few banks will lease these to you at a monthly fee, so you never get to own the terminals. You may or may not see that as a benefit.
Monthly minimum fees are becoming an industry standard so you could probably expect to pay these as well. A monthly minimum fee activates if the turnover of your credit card transactions does not meet an agreed minimum amount, a minimum amount you would have agreed to when you signed the contract with your bank.
Credit Card Processing fees also include discount rates. As the phrase indicates, a discount rate means that your bank pays the transaction amount into your merchant account at a discount. In other words you do not get the full transaction amount paid into your merchant account. In fact, your bank will withhold up to 3% of the transaction amount when it deposits the funds you are owed. This discount rate compensates the bank for the fees they incur in processing the transaction on your behalf, and is also the point where the bank introduces a substantial profit margin, by which it makes the majority of its profits.
Depending on how many credit card transactions your Credit Card Processing system is used for, the discount rate may very well be by far the most substantial part of the cost of your Credit Card Processing system, to the extent that incidental monthly and daily fees won’t make much of a difference.
It is hard to see why banks need to charge holders of merchant accounts a statement fee. If a merchant is content with online statements there really shouldn’t be a need to mail any documents in the post, and even if documents are mailed, it is surely not at the cost of the statement fee. Perhaps banks believe they need to be honest about their fees and charges, if not modest.