Merchant onboarding is a process in which a payment processor or acquiring bank sets up a new merchant account and enables them to accept electronic payments. This process includes various steps such as application processing, underwriting, risk assessment, and integration of payment gateway and hardware. In the USA, the cost of merchant onboarding varies based on several factors such as the size of the business, the payment processor used, and the industry.

Let’s dive into the details of each of these factors and how they impact the cost of merchant onboarding.

Size of the business
The size of a business plays a crucial role in determining the cost of merchant onboarding. Smaller businesses with lower transaction volumes will typically pay less to onboard than larger businesses. Payment processors charge a higher fee to larger businesses because of the increased risk and potential liability associated with larger transaction volumes. A small business owner can expect to pay around $50-$150 to onboard, whereas a larger business may pay $500 or more.

Payment processor used
The payment processor used by a merchant also affects the cost of merchant onboarding. There are various payment processors available in the USA, including Stripe, PayPal, Square, and Authorize.net, to name a few. Each payment processor has its own fee structure and pricing model, which can impact the cost of onboarding. Some payment processors charge a flat fee for onboarding, while others charge a percentage of the transaction value. The average cost of onboarding with a payment processor is between $0 and $500.

Industry
The industry in which a business operates can also impact the cost of merchant onboarding. High-risk industries such as gambling, adult entertainment, and tobacco are considered risky by payment processors, so they charge higher fees to onboard these businesses. Low-risk industries such as retail and food service are less risky and have lower onboarding fees. On average, high-risk businesses can expect to pay between $500 and $1,500 to onboard, while low-risk businesses can expect to pay between $50 and $500.

In conclusion, the cost of merchant onboarding in the USA varies based on several factors such as the size of the business, the payment processor used, and the industry. Smaller businesses with lower transaction volumes will pay less to onboard than larger businesses. Payment processors charge a higher fee to larger businesses because of the increased risk associated with larger transaction volumes. High-risk industries such as gambling and adult entertainment pay more to onboard than low-risk industries such as retail and food service. Before selecting a payment processor, it is essential to understand their fee structure and pricing model to determine the total cost of merchant onboarding.