MasterCard’s Merchant Location Fee

In 2016, MasterCard announced it will start charging a higher annual fee to merchants. Also known as the merchant location fee, this additional cost comes directly from the network, not payment processors. Some processors (like HMS) will pass the fee on directly to merchants. Other processors will undoubtedly mark up the fee for unsuspecting merchants.

MasterCard will begin billing the fee on February 17, 2017. The fee is set at $15 per merchant location for traditional payment processors. Facilitators such as Square will be charged $3 per merchant location as well. This fee has gone up from $7.50 per merchant location in 2016.

What is the Merchant Location Fee?

This fee charged annually to merchants is based on how many locations the merchant operates. A merchant location is defined by the network as a separate business site, whether virtual or physical, that accepts card payments for products or services. Only active merchant locations have to pay the fee. Active merchant locations refer to locations that accept a transaction between the first and last day of the month.

There wasn’t much consistency at first in how the fee was charged to merchants. In some cases, it has been a bi-annual fee; in other cases, monthly. MasterCard recently clarified the terms of the fee to say it will be billed quarterly beginning with the first quarter of 2017. The cost of the fee is not distributed either. This means a payment provider must still pay MasterCard the $15 annual fee even if the merchant only has an active account for one month. Note that this fee is not applicable for locations in Puerto Rico and the Virgin Islands.

How Much is the Fee?

The fee is lower for payment facilitators like Square than traditional acquiring institutions. Payment facilitators will be charged $3 per merchant location, while traditional acquirers will face the $15 per merchant location fee. This fee comes from the network, not payment providers.

A merchant with four locations and the same tax ID number will see an annual fee of at least $60 or more, depending on the markup from the payment processor.

The merchant location fee is part of the cost of accepting card payments from customers, but there are steps merchants can take to minimize their processing costs. Be sure you carefully compare processing fees and choose a provider with upfront and clear pricing. If you are not sure of the breakdown of the fees you are paying, it is easy for a provider to add a markup to the fee. At Host Merchant Services, we take pride in offering upfront pricing to our customers with no hidden fees or contracts. Contact us today to learn more about how we can help your business grow.

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