It’s very easy to overlook the additional charges you will encounter when accepting credit cards online.  I’ve been sucked in before with promises of a lower rate, only to find out that it wasn’t quite as good as it seemed in practice.  There are several types of fees you’ll see when evaluating potential credit card processing services.  Not all companies use all of these categories (thank goodness), but you’ll likely see several of these in combination:

Per-transaction percentage

This is the number you’ll see thrown around the most – exactly how much of your cash are they sucking off for every transaction?  In the mainstream (aka. non-adult/high-risk) world, with a merchant account from a bank, this can be as low as around 2-3%.  Not so in the risky business of adult content.  This percentage will range from about 8%, if you’re doing a very high volume, up to about 19%.  Most companies who process high risk transactions will be in the 11-17% range.  So this means that for every $10 you charge, they will be getting about $1.50 right off the bat.

This percentage often is adjustable, depending on your transaction volume.  It also depends on the types of payments you are accepting, and is significantly higher for things like check and phone billing.  It can also be higher for rebills (which is when you have a customer automatically billed at a certain interval).

Per-transaction fee

The per-transaction fee is a flat rate per transaction processed.  This is most likely charged to you whether the transaction is a success or failure.  I’ve seen this anywhere from $0.30 to $1.95.  Some of it depends on how they word it, and this fee is often combined with the next category:

Service fee

This one annoys me.  PayMonde (used to be MyVirtualCard), for example, charges a $1.50 “service fee” for every transaction.  The annoying part is that they don’t disclose this up front, and when I pressed them for an explanation after discovering it when I signed up, they brushed it off.  Their take is that I shouldn’t worry about it, and it’s not me paying the fee, it’s something that the customers pay, much like how an “ATM charges you a service fee.”  Um, yeah.  Well, someone still has to pay it.  I’ve skirted this issue by quoting the entire fee up front to my customers so they aren’t surprised when they hit the payment form, despite that causing some technological hassles. 

Refund fee

Another way to kick you while you’re down – you sometimes have to pay a fee when you refund a transaction.  Hopefully you won’t need to be giving out too many of these, but there will be times when someone has encountered problems and they’re very unhappy, or perhaps they got double-charged.  Again, using PayMonde as an example, if I refund a $9 transaction, the customer will only get $7.50 back (less the service fee), PLUS I pay $5 for the privilege of being able to refund them, and of course I’m out the per-transaction fee. 

Failed transaction fee

If a customer attempts to pay and the transaction doesn’t go through, this is a failed transaction.  Sometimes you will be charged a fee for this.  Usually it’s small, like $0.50, but it can add up.  About 1 in 15-20 of my transactions fail at some point.  Often it just means that the customer made a typo, or used the wrong address, or tried to use a card that isn’t accepted.  You can see how these little fees are starting to add up…

Chargeback fee

This one varies a lot among companies, from nothing, to $50.  A chargeback is when a customer denies to his credit card company that he/she has made the charge.  These are characteristically high in the adult industry (“No honey, I swear I didn’t make this purchase to BigBoobBlondes.com!”), hence the high fees.  There are steps you can take to make sure this doesn’t happen too often to you, but it is bound to happen occasionally and is difficult to challenge.  Also, sometimes this is calculated into your percentage fee, by either giving you an increased or reduced percentage if you have a particularly high or low rate of chargebacks.

Setup fee

Just what it sounds like – an initial setup fee for using the service.  Again, it ranges from nothing, to thousands of dollars.  Often combined with or a synonym for the next one…

Visa fee

Visa changed their regulations a while back and now charges $750 up-front for any adult merchant to process Visa cards.  Some billing companies put themselves in the middle and will essentially absorb this fee, but some charge it to you up front.  There is also a $375 maintenance fee per year.  CCBill is one of the most common adult processors and they charge you these fees.

Annual/monthly/weekly fee

No big surprises here, simply a fee charged to you at a regular interval for using the service.  Verotel Pro charges a $7.50/week “registration fee.”

Reserve

Ahhh, the fun of the rolling reserve.  A reserve is a percentage of your earnings that the processor will hold in “reserve” for a certain period of time.  It is used as a cushion in case you have chargebacks or fraudulent transactions, and these will be deducted from the reserve.  There are two numbers to ask about here – the reserve percentage, and the hold time.  For example, if it’s 5% and 180 days, this means that 5% of your money will always be held for 180 days and then released to you.  This is called a rolling reserve because the amount is held and released on a continuous, or “rolling,” basis.

Payout fee

No, we’re not done yet  :)  Last but not least, there’s the fee that you will be charged to actually GET your money.  Companies pay out in a variety of ways, most commonly checks, direct deposit (also called ACH in the U.S. or DEFT in Canada), wire transfer, and sometimes a proprietary debit-type card.  The fees here will vary, from free up to around $30 for an international wire.

Don’t forget there’s still the fact that they are holding onto your money for a certain period and only paying you once or twice a month, or weekly at best case.  If you’re relying on a check sent through the mail, it could be 2-3 weeks before you actually see the money for a sale that you made.