Glossary of Terms

Application/Activation & Set up Fee
These fees are usually one-time fees charged to process your merchant account application, provide you with Internet processing software, establish and setup a gateway, and in general get you started processing credit cards. 

Average Ticket/Transaction Size
The average amount of all of your merchant account transactions.  Even though, you may have transactions that are $2000 for several merchants, if you have lots of smaller transactions the average transaction would be lower.  Add up the amounts of all of your transactions and divide that number by the number of total transactions.

Discount Rate
The percentage of the transaction that the merchant is charged by the merchant service provider for facilitating a credit card transaction.
Example: ( 2.40% of $100 = $2.40 )

Cancellation Fees
Some companies may charge a cancellation fee if you cancel your account, check your contract.

Transaction Fee
Small charge paid to the "processing network" (e.g., Visa/MasterCard) for use of their system, for each transaction processed.
Example: ( 2.40% of $100 = $2.40 + .40 cents for the transaction = $2.80 )

Minimum Monthly Fee
Merchants pay for credit card service on a per transaction basis, through a combination of transaction fees and discount rate charges. Generally, based on normal business volume, these transaction-related charges cover the minimum monthly fee.  So this fee is normally only imposed if you have less than $1000 worth of monthly charges. 
Example: ( 2.40% of $1000 would be $24.00 which would be $1.00 less than a Monthly Minimum of $25)

Monthly Service & Statement Fee
Monthly service charge paid to merchant service providers for statement preparation, reports and 24/7 technical support. 

Monthly Gateway Fee
A monthly service fee charged for using secured processing fiber-optic lines to complete transactions immediately in encrypted, protected code over the Internet and for providing 24/7 gateway technical support.

Monthly Volume
The total Monthly amount of credit card transactions.  Add up all credit card charges to get this total.