With a Merchant Services Provider, you have a chain of relationships.
The first is a credit card gateway. Authorize.net is one of the most well-known, but some gateways are built-in to the MSP. The gateway securely handles the transaction.
The company that really matters is the actual MSP. The MSP verifies and accepts money from your customer and then deposits it into your bank account. The MSP works with banks to handle funds.
Along this chain are a flurry of charges. The gateway charges monthly, but the MSP can too plus it can have dozens of fees.
The MSP can require a three-year contract that renews without your consent, although this is changing. They can charge fees for setup, transaction, compliance, non-use, assorted penalties, and cancellation. They will charge higher fees for corporate cards, foreign cards or reward cards. They will charge higher fees if you type in the card number instead of swiping it.
Transaction fees are a percentage of each sale and are usually negotiable. Call your MSP at least every year.
Cancelling an MSP
If you cancel your merchant account, you can get a penalty fee or, worse, a 'liquidated damages' fee which is a penalty based on the anticipated processing charges over the entire remaining period of your contract, according to Merchant Maverick.
The best merchant account companies will offer no long-term contracts, no account closing penalties and no damages.
Cancelling a contract with a bad MSP can be tricky. One MSP called EVO Payments, is known to charge fees for months after the account is cancelled. Some consumers tell Merchant Maverick that they have to literally close their checking accounts. Don't rely on BBB ratings here, as the worst can have A ratings. Check this link for some of the best MSPs: https://www.merchantmaverick.com/merchant-account-comparison-chart/
