What is MasterCard’s Merchant Location Fee?


Recently, MasterCard made a quiet but significant announcement. The announcement is the company will begin charging an annual fee to businesses. Known as a merchant location fee, this isn’t something that’s being implemented by payment providers. Instead, it’s coming directly from MasterCard. Although there will inevitably be processors that mark the fee up when they pass it on to their customers, this is a fee that businesses have to deal with. The best way to minimize any negative effects from this fee is to understand exactly what it is.

Understanding MasterCard’s Merchant Location Fee

While the name of this fee can be a little confusing, it refers to how many locations a specific business has. In terms of pricing, the fee follows the model of assessment fees from other brands by being lower for payment facilitators than traditional acquiring institutions. A facilitator will only be on the hook for $3 annually per merchant location, while the fee for traditional acquirers is $15 per location. The significant difference between those price points is why the final cost for a processor may have some variability.

When this fee was originally announced, it was believed that businesses would be evaluated for their total number of active locations at the end of 2016 and then charged according to the pricing method for MasterCard’s location fee. But to the surprise of many, numerous businesses began seeing this fee on their statement at the end of last month. This has brought up questions about how discrepancies in the number of locations a business has will be handled. Some merchants are also wondering if the fee resulted from an action they took or just due to MasterCard rolling it out to specific groups of businesses first.

Even though there are still some unanswered questions about this specific fee from MasterCard, it is similar to others in that it comes down to payment providers as to how the fee is passed along. For example, even though charges have rolled out across some businesses, there are payment providers that have come out and said none of their customers will get charged until 2017.

Saving Money on Processing Fees

Because MasterCard has shared very little information about this fee, many processors are in a position of being unsure of what exactly to tell businesses. However, that’s not necessarily something that needs to be a major concern or deal breaker for businesses.

Instead, MasterCard’s merchant location fee is an important reminder of fees being part of the package for any business that wants to accept credit and debit card payments from customers. What we want to emphasize is regardless of the specific fees a business may face, there are still ways to minimize credit card processing costs.

Reducing these costs starts with comparing processors. If that’s something you haven’t recently done for your business, we highly recommend taking a look at our top processors. Doing so will help you see if you’re overpaying to process transactions. In the event you are, all the free resources we provide make it easy to reduce your processing fees by finding the best rate for your business.

Posted on Wednesday, September 21st, 2016