MO/TO Merchant Account Rates

Mail order and telephone order merchants (MO/TO) operate in a card-not-present environment, just as their eCommerce counterparts and, just as them, they pay higher processing rates than brick-and-mortar merchants. Once again the culprit is the higher probability of generating customer disputes and the resulting chargebacks. Yet, payment processing fees that merchant account providers charge MO/TO businesses are not quite the same as the ones web-based merchants pay. There are certain differences between the two major card-not-present merchant types in the way they accept credit cards and, as a result, the payment acceptance capabilities that are needed are also different. Following is a list of the processing fees that MOTO merchant account users should expect to be charged:

• Discount rate. The discount rates should be the same as the ones for web-based merchants. A reasonable rate would be 2.19% or lower, if you can find it. Make sure your small business merchant account provider charges you a lower rate for debit cards - 1.98% would be acceptable. Ask your prospective merchant services provider what pricing model they are using. The pass-through model would be your best option.
• Transaction fee. The majority of the merchant account providers now charge a $0.25 transaction fee. I have not seen anything lower than that. Application and set up fees. You should not pay any set up or application fees.
• Virtual terminal fee. Virtual terminal is the service that allows MO/TO merchants to enter their customers' payment details, through a web browser, directly into their merchant processing bank's system. You should not be charged for setting up a virtual terminal. There should not be a monthly fee either.
• Monthly statement fee. Every merchant processing account comes with a monthly fee (its name varies by provider). You should not consider anything above $15.
• Support fee. You should not agree to paying support fees.

The biggest difference in processing fees between web-based and direct merchants can be found in the eCommerce gateway-related charges. Direct merchants do not use payment gateways, as their customers do not place orders over the internet. What they use instead is a virtual terminal to manually enter the already provided payment details. Overall, a direct marketing payment acceptance solution should provide for a cheaper payment processing service than an online one.