Fees: Why Does My Merchant Account Provider Charge Fees?

Fees:  Why Does My ePayments Provider Charge a Fee?

Fees are charges that are often associated with ePayments. They are assessed to cover the cost of the technology, security, and automated bill delivery mechanisms that facilitate ePayments.  In some cases, fees can be shared as commissions to reduce or eliminate costs associated with ePayment acceptance.

1. Delivery Fees. Xpress-pay is in the bill delivery and security business. Accordingly, a fee is charged to use the site.  We refer to this as a “Site Fee”.  This fee facilitates the continuing development, operation, and maintenance of the ePayment platform for desktop, tablet, and mobile devices. It is a standard and acceptable practice for pizza shops, FedEx and U.S.P.S. to charge fees for the delivery of products, goods and services.  Likewise, an ePayments technology provider also charges a fee for access to technology that allows ease of payments via credit cards, debit cards and ACH transactions.  Additionally, to prevent unauthorized access to PII (Personally Identifiable Information), ePayment providers are required by the Payment Card Industry Data Security Standard (PCI DSS) to maintain the level of security appropriate for their processing volume.  Level 1 is the highest level of certification and is very expensive to achieve and maintain. Consequently, security is a major cost center in the operation of an ePayment platform.
2. Surcharges, Convenience Fees, and Site Fees. There is often confusion regarding the differences between a surcharge, convenience fee, and Site Fee.  Surcharges are fees that are added to the cost of a purchase when a customer uses a credit card.  Convenience fees are charges levied for the privilege of paying for a product or service using an alternative payment method. A Site Fee, as discussed above, is a charge for the use of a payment site to provide for its development and operation.
3. Cost Recovery. A Site Fee can assist in cost recovery for organizations previously unable to offer alternative payment methods to consumers.  For instance, municipalities and educational institutions are examples of entities that are unable to absorb the costs of accepting credit card fees.  With the Site Fee model, a secondary transaction for the fee maintains separation between the primary proceeds and the fee. Where necessary, the secondary transaction may be sent directly to the merchant service provider, completely insulating the recipient of the primary payment from the fees and accounting considerations.

Site Fees are an excellent option for organizations seeking to mitigate or eliminate the costs associated with accepting ePayments. It also provides card issuers and merchant service providers access to market sectors that were previously inaccessible. Site Fees can also help with client retention, increase revenues, and reduce merchants’ overall expenses.