eCommerce Knowledge Guide

What is a Merchant?

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  2. eCommerce
  3. What is a Merchant?
  4. Merchant Costs

Knowledge Guide Chapters

  1. Merchant Definition
  2. Merchant Responsibilities
  3. Merchant Costs
  4. Merchant Technology Requirements
  5. What is a Merchant Account?
  6. Merchant Risk Management
  7. Getting Started as a Merchant

Merchant CostsInventory is Just One of the Costs of Being a Merchant

David Pirtle | July 29, 2025 | 2 min read
Merchant Costs

Merchant Costs to Consider: How Much Revenue Do You Need to Be Successful?

As a current or aspiring merchant, you probably know that there’s a virtually limitless number of costs you can incur as you go. There are dozens of day-to-day outlays needed just to operate a business: inventory, salaries, marketing expenses, transaction costs, taxes… the “expense” portion of your income statement can often have hundreds of line items.

But these costs are obvious. There is also an entire schedule of different charges and fees associated with being a merchant. From payment processing to chargeback fees, some of these costs you may not even know about until they hit.

In this article, we’re looking at one particular subset of expenses: the costs involved with accepting credit, debit, or prepaid card purchases. We’ll examine some of the more universal ones and offer insights into how you can manage them effectively.

Common Merchant Fees

In the age of eCommerce, accepting payment cards is essential. This privilege, however, comes at a price. While they can vary depending on the bank, the card brand, the processor, and more, you'll likely face some version of these fees no matter whom you partner with. For example:

Fee Type

Merchant Account

In order to accept payment cards, you need to have what is called a merchant account. This type of bank account has one purpose: a temporary, post-transaction holding place for funds from customers’ card payments before they’re deposited into your business’s normal bank account. The cost for a merchant account can vary widely, and is often rolled into the processor’s fee.

Fee Type

Setup Fees

Your acquiring bank or payment processor may charge a one-time fee to set up your merchant account. This fee covers the cost of underwriting and onboarding, and can range from $0 to upwards of several hundred dollars.

Fee Type

Interchange Fees

Interchange fees transaction-based charges paid to the cardholder’s issuing bank on every sale. They’re typically expressed as a percentage of the transaction amount, plus a flat fee (e.g. 2.9% + $0.30 per transaction).

Fee Type

Processor Markup Fees

Your payment processor, which is typically integrated with a payment gateway, will often charge markup fees. These fees are usually expressed as a fixed amount or percentage over and above the interchange fees assessed by issuing banks.

Fee Type

Chargeback Fees

Your acquirer will assess a $20 to $100 administrative fee every time you receive a chargeback. Even if you receive an invalid dispute, or you end up winning the case in representment, you’ll still pay this charge. The same holds true if your processor charges a similar fee.

Did You Know?

If you’re receiving chargebacks, admin fees are the least of your worries. The total cost for each chargeback also includes lost merchandise, refunded shipping, and risk of being labeled a “high-risk” merchant, which involves notably higher processing costs.

Fee Type

Termination Fees

If you decide to close your merchant account before your contract is up, you may be on the hook for a termination fee. This fee can be a flat rate or may be calculated based on the remaining term of your contract.

This is just a partial list, and again, the different amounts will vary by any number of factors. In some cases, all processing costs will be bundled together. You may be looking at monthly costs or per-transaction fees (or both). It pays to do a lot of front-end research so you know exactly what you’re getting yourself into.

Illustration: Merchant with no money standing next to his broken store

Next Chapter

Merchant Technology Requirements

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