Merchant accounts suck

This is a partial list of the fees charged by my merchant account provider each month.

Not only is the list of fees enormous and indecipherable, but ever-changing as well. 10 out of 12 months each year, my monthly statement starts with a notice of one of these many fees increasing, or a new one being added. Continued use of my account is acceptance of these changes.

It’s to the point that I’m paying more than 5% of my gross sales to various fees, despite originally being quoted a rate closer to 2%. Some of the fees seem simply made up, like the new $9/month flat fee masquerading as a “Customer Service Fee” even when I never contact customer service.

Can I take my business elsewhere to do better? Not really. My customers’ cards are locked up in my payment gateway’s secure storage solution (Authorize.net’s CIM), and they do not transfer gateway accounts to different merchant accounts. If I wanted to move, all my subscription customers would have to provide new billing information to be stored at the new account; I would lose more than 5% of revenue doing that, as at least 5% are not heavy users and would probably let their subscription lapse instead of being hassled.

I’ve come to prefer third party payment processors like PayPal, Amazon Payments and Stripe to traditional merchant account providers. While comparing their marketing materials shows the third party processors to be more expensive, it’s not really true. PayPal takes a flat $0.30 + 2.2% out of every transaction. My account is nearing its 13th anniversary with them. My fees have gone down, not up, since joining.