Default HubSpot Blog

Current Articles | RSS Feed RSS Feed

What is a monthly minimum fee?

Posted by Alex Neir on Thu, March 03, 2011 @ 04:09 PM
Monthly Minimum Fee

What is the monthly minimum fee on a merchant account?

The monthly minimum fee is the minimum amount you will pay in interchange fees on your merchant account regardless of how much, or rather how little is processed for the month.

It is important to understand that your monthly minimum fee is based on your total interchange fees and nothing else. For a list of all the fees associated to a merchant account please see: 7 items to consider with affordable credit card processing

Let look at an example. Let’s say you have a small business and credit card payments vary each month. Some months you have a lot and some months none at all. Below are the rates/fees set up on the account

  • Qualified Transactions: 2.39%
  • Non-Qualified Transactions: 3.39%
  • Statement Fee: $10.00
  • Monthly Minimum Fee: $15.00

All transactions are for $100 for simplicity.

Month one you have 3 qualified transactions and 1 non-qualified transaction.
The total interchange fees for the month: ($2.39 x 3) + ($3.39 x 1) = $10.56. This amount is less than the agreed upon monthly minimum fee of $15.00 so the $15.00 minimum gets applied to the bill.

Your month end bill would be: $25.00. Interchange plus the statement fee.

 

Month two you have no transaction.
The total interchange fees for the month = $0.00. This amount is less than the agreed upon monthly minimum fee of $15.00 so the $15.00 minimum gets applied to the bill.

Your month end bill would be: $25.00. Interchange plus the statement fee.

 

Month three you have 4 qualified transactions and 5 non-qualified transaction.
The total interchange fees for the month: ($2.39 x 4) + ($3.39 x 5) = $26.51. This amount is greater than the agreed upon monthly minimum fee of $15.00 so the $26.51 gets applied to the bill.

Your month end bill would be: $36.51. Interchange plus the statement fee.

From this example you can see the difference it makes to negotiate your monthly minimum. For additional help please contact our friendly staff at (800)917-8026 as we welcome the opportunity to help with any payment processing questions.

Tags: Interchange Fees, Credit Card Processing Fees, Monthly Minimum Fee