Monthly Fee

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Monthly Fee

If you are reviewing your billing statement, you may notice a monthly fee as one of the line item charges.

A monthly fee is one that is assessed by the credit card processor on a regular basis each month. 

Not every payment processor collects a monthly fee. 

Some reasons that a payment processor may be assessing a monthly fee include high risk accounts and subscription based pricing accounts. 

Subscription Pricing Monthly Fees

One of the most common reasons for seeing a monthly fee as part of your monthly statement is due to the pricing structure of the credit card processor. 

In a subscription based pricing model, one flat fee is charged each month and a small flat fee per transaction is assessed. 

There is no percentage applied to each transaction. There are benefits and disadvantages to this structure. 

For one, you can predict the cost of processing with a high degree of accuracy. This can make it easier to plan your business’ finances. 

Credit card processing companies often subject transactions to different rates depending on the nature of the transaction (ie. type of card, if the card was present). Since there is no percentage rate applied in subscription model pricing, there is also no variability.

If you do not process many transactions or operate a seasonal business, a monthly recurring charge may not make sense for you. 

Occasionally, payment processors utilizing a subscription based model may require an agreement for a particular length of time. 

While this is also possible under other pricing models, this could be a reason to shy away from subscription based pricing. 

High Risk Monthly Fees

Having a high risk business is another reason a processing company may charge a monthly fee on a business account.

Credit card processors collect this fee to help offset the risk they take on from working with high risk businesses. 

Businesses can be considered high risk for a number of reasons including: 

• Type of industry
• High percent of chargebacks
• High volume of transactions 

Other Cases

If your payment processor is charging a monthly fee for a reason other than these, it might be a good idea to ask what the monthly fee is for. 

There are many processors who do not charge a monthly fee so this is important to keep in mind when comparing the costs of credit card processing. 

Each business has a unique transaction pattern so each pricing structure must be assessed by each business to determine which type makes the most sense for the account. 

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