Processing Fee
A processing fee is a recurring charge applied to MCA accounts — typically monthly $50-$200 — covering administrative costs of payment processing, account management, and ongoing servicing during the advance term.
Why This Matters
Processing fees are common but not universal in MCA structures. Where applied, the monthly fee adds meaningfully to effective cost on shorter-term advances (a $100/month processing fee over 6 months adds $600 to total cost of a $50K advance, increasing effective cost roughly 1.2 percentage points). Some funders bundle processing into origination fees rather than charging separately; this creates pricing-comparison complexity across funder offerings. Merchants should always verify fee structure during term sheet review to avoid surprise charges.
Frequently Asked Questions
Frequently Asked Questions
Are MCA processing fees standard?
Some funders charge them; others bundle them into origination fees or factor-rate pricing. No universal industry practice. Always verify monthly fee structure during term sheet review and factor processing fees into total cost calculations.
How can merchants minimize MCA processing fees?
Compare funders explicitly on total fee structure (origination + processing + miscellaneous). Some funders compete by offering 'all-inclusive' pricing without ongoing processing fees. Net effective cost comparison reveals the lowest-cost option regardless of fee structure naming.