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"So What's the Deal With 'Free' Merchant Accounts - Do They Exist?"

Keep reading to discover the truth about getting a "Free" merchant account...

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"Accept by Phone is one of those ideas that works just like it sounds. You can process payments from a client quickly by dialing a toll-free number, entering your client's credit card number through an automated system, and then authorizing and processing the payment, all in a few seconds...

Dennis Kennedy


"Accept by phone was an excellent way for our new business to begin accepting credit cards, without the need for complicated contracts and expensive equipment..."

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Capital Region Limousine


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Let's not beat around bush here. There's no such thing as a free lunch - and that applies to the merchant industry as well...

Everything has a price - in cash, time, effort and so on. Common sense would tell you that no one would be doing business by giving a primary service or product away for free - unless they're a donation-supported charity. Hence, it is important to find out exactly how the so-called "free merchant account" companies end up with your money...

This article is meant to educate you regarding the fees that the "free merchant accounts" actually charge. I hope that it will help you make the right decision - and informed one - for your business.

The Basics:

Visa, Master Card and other card companies impose charges on payments processed by a merchant. There are a number of tiers or levels in the interchange rate and each credit card will be charged according to the tier or level it qualifies for.

For example:

1. Qualified rate - This is the rate charged when the card is present physically at point of sale.

2. Mid-qualified rate - This is the rate charged when the card is imprinted, but not swiped. This usually occurs off-site where a terminal is not present.

3. Non-qualified rate - This is the rate charged for "MOTO" transactions (mail, internet or telephone order).

Furthermore, there are a number of fees that are attached to the merchant accounts upfront or as back-end fees.

The following are the most common fees you might encounter:

1. Transaction Fees - this is charged each time a transaction is completed. This is flat rate, usually ranging from $0.10 to $0.25

2. Discount Rate - this is a flat-rate percentage that is taken out of each sale processed through the merchant account. Discount rates range from 0.95% - to 7% or more depending on the merchant service and its intended use.

3. Statement Fees - this is a fee that is charged routinely for the generation of a monthly transaction record.

4. Monthly Minimum Fees - there is always a minimum fee charged when the total fees of that month of the merchant account do not equal the minimum required business transaction level. For example, if the minimum fee is $15 and the fees incurred from using the service are only $10, then an additional $5 will be charged for that month.

5. Cancellation Fees - this is a penalty charge that ranges from $150 - $275 if the vendor (you, potentially) cancels their account before the term expires, which is usually 2-3 years.

6. Batch Fees - when a merchant settles their terminal a fee is charged. This fee is known as batch fee because this process is called batching.

As you can see, there are a multitude of fees that will be charged for any standard merchant account. There is absolutely no way anyone can provide you with a free merchant account, because the interchange fees have to be paid by someone, and someone else will definitely not pay for you to use their service at their own expense.

A logical explanation would have it that these fees would be extracted in different manner, most of which would be indirect and "hidden". And in that light, it's always better to opt for a service that clearly discloses its complete fee structure up-front, instead of being "lured in" under the premise of getting something for "free" - only to find yourself the victim of an endless array of hidden expenses...

Though they're few and far between, there are a few companies that provide a great service with a low-cost fee structure. You'll be far better off looking into those services, instead of chasing after the "free offers".

Bottom Line: Free merchant accounts don't exist.

It will cost you money to accept credit cards, one way or another. Always read the fine print (the terms of service), and realize that most companies that portray something as being "free" will make their money by locking you into a contract of some kind - most of which are "incentivised" with a steep cancellation fee.

So do your research, and look for reasonable, realistic processing charges that make sense for your business.

Because an overly "cheap" merchant account will almost definitely turn out to be an overly-expensive mistake...

Find out more about real-life, affordable small business credit card processing charges >>


With Accept by Phone, swiped transactions are only 2.69% (keyed transactions are 3.49% and $0.19 per transaction).

No signup fees, no monthly fees, no PCI fee, no monthly minimum, and no cancellation fee.

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