Merchant account providers charge small businesses a discount rate or sales commission on each sale. This rate usually ranges from 2.25 to 3 percent for small or home businesses. For example, if the discount rate offered is 3%, and you make a sale for $30, you will owe 90 cents to the merchant account provider.

However the discount rate and other fees you pay depends on many factors like the type of business you are in, the length of time you have been in business, the number of years you''ve been in business, the percentage of your sales that are made over the phone or the Internet, the average dollar amount of each sales transaction, the total dollar amount of sales per month and your personal credit rating. There may also be service fees that add to your costs.

Some merchant account providers may charge you discount fees less than 2 percent, but these are usually for sales made by running the customer''s credit card through a machine.

While looking for a merchant account provider it is very important to compare processors – be sure to find out about all the fees, cost of equipment if any is needed, transaction fees (the fee you pay on top of the discount for each transaction you process), address verification (if extra) fees, monthly minimums, monthly statement fees, voice verification charges, and any other costs you will incur.

Also, check if the company requires you to maintain an account in their bank in order to process cards. Many will require this and it is important that you make an informed decision.

Giving some thought to and calculating the cost of equipment, software, processing, etc. is also a good idea. It will help you evaluate your overall cost and assess if your sales will make up for those costs. It is always sensible to buy any equipment that you may need, rather than leasing it. There are two major problems to this: It will add to your recurring costs and you will have to commit to the lease for at least three or four years.

Also, check to see the conditions in case you need to terminate the service, and, whether there are monthly minimums or maximums associated with that.

Most importantly, always read all the fine print carefully and thoroughly.