You should know clearly how you'll be charged and what you'll be paying when you open merchant account. The terminology here will help to demystify some of Payment gateway industry jargon.
The discount rate is the commission charged by the payment gateway for using it's facilities. For example CCAvenue charges 3% TDR in Privilege plan. It is usually inversly proportional to the initial setup fees you pay to the payment gateway provider to open a merchant account. In India the more setup fees you pay the less TDR you get. It is a trade off between the initial investment amount and the low TDR. In most of cases it is a fixed percentage say 5.5%. However it could be other way too. For example AlertPay charges 4.9%+Rs. 12 per transaction for Indians. So if you sell Rs. 50 product then AlertPay's commission will be Rs. 2.45 + Rs. 12 = Rs. 14.45.
That is every transaction incurs a fee whether or not it is successful.
There is a small payment gateway company charging Rs. 20 on any refunds/rejection of any customer transaction.
Transaction failure can also attract charges, for example the same above company is charging Rs. 5 for failure of each IVR transaction.
Some providers charge fees to sending monthly statement that shows monthly transaction for the merchant.
This is one of the most important of all fees you want to check. If you buy an item from Paypal, Paypal gives you every right to ask for a chargeback if you were fradulantely charged by the merchant. Especially Paypal is strict on this and will most likely refund the customer with penalty on merchant or possible ban.
It is associated with risk too. What if lot of customers claimed chargeback and the merchant has no money then the provider( CCAvenue, Paypal etc) will have to pay the amount from their kitty. Also Card Associations(VISA, MasterCard) penalize the payment gateway if the merchant chargebacks exceed limit of 1% of total transaction which subsequently passes this fees on to the merchant
In India all payment gateway provider charge a setup fees for opening an account with them. But some payment gateway providers like Paypal and AlertPay do not charge any account opening fees.
Some providers charge merchant annual fees or even quarterly to cover their costs.
Some providers especially high risk one's charge a monthly fees from the merchant if the merchant is not able to make sufficient amount of transactions, which otherwise would have made up for it's maintenance charges through the TDR.
Some provider charge a termination fees if a merchant closes his/her account with the payment gateway provider earlier than the stipulated term. It's exactly closing your savings bank account within six months of opening and almost all bank charge a fees for it.
This is especially charged by Paypal if you want to withdraw your funds to your bank account in India.
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