Accepting cards has hidden costs. A $24 annual administrative fee can be your clue. It points to two parts of pricing: wholesale (interchange + assessments, non-negotiable) and markup (the negotiable processor cut). Some providers unbundle fees and list the $24 openly; others bundle everything into one flat rate. A visible fee isn’t proof of fairness; the only thing that matters is your total annual cost.

Read your statement, compute your effective rate, and question vague line items. Ask for Interchange-Plus quotes and a complete fee schedule. Check monthly minimums, termination terms, and PCI/AVS charges. Run your numbers: unbundled often wins for low tickets; flat-rate can suit high tickets.

Overview of the Annual Administrative Fee

An Annual Administrative Fee is a fixed charge billed once per year. It’s separate from per-transaction costs, which vary with your sales volume. No matter how many transactions you process, you’ll pay the same annual fee. For many merchants, this line item is the first sign that there’s more to card processing than the swipe rate.

This is a recurring charge levied by a merchant service provider (MSP) to cover the ongoing operational costs associated with maintaining a business’s merchant account.

The stated purpose of this fee is to offset a wide range of a processor’s back-office expenses. These can include providing dedicated customer and technical support, funding the continuous development of secure payment technologies, and managing the complex requirements of industry compliance and data protection.

What the Annual Fee Covers and How Much It Is

At Host Merchant Services, the annual fee is $24.00. It pays for preparing and filing the IRS Form 1099-K, which reports your card and third-party payments. Beyond 1099-K, the fee helps cover:

• Dedicated customer and technical support
• Ongoing system security and software updates
• Compliance management (PCI, data protection)

Even if your business has few transactions, the IRS reporting obligation remains. The fee ensures Host Merchant Services can deliver that service year after year.

When the Fee Is Charged?

As mentioned, the annual fee posts once per year, either on a fixed calendar-month (e.g., every January) or on the anniversary of your account opening. Check your agreement or past statements to confirm which applies. If you opened mid-year, some providers prorate the first charge; others bill the full amount.

If you close mid-year, refunds vary by contract; some are nonrefundable, some prorate on request. If you have multiple MIDs or have changed your legal entity, the fee may be posted per MID and can reappear on the new account. Please ask support to credit any duplicate fees.

How Host Merchant Services Displays the Fee on Statements

On Host Merchant Services statements, the charge appears as “Annual 1099 reporting Fee – $24.00.” You’ll usually see it in the “Other Fees,” “Monthly/Annual Fees,” or “Account Fees” section, separate from per-transaction charges. It posts once per year (not monthly), so it will show up on one statement and be absent on others.

To confirm, check the summary page: the $24 will be listed as a single line item with no percentage or per-item math. If you keep e-statements, compare the same month year over year to verify it recurs only once. If you opened the account mid-year, it may appear on your anniversary month; if you changed legal entities or MID numbers, it can reappear because it’s tied to the account setup.

Host Merchant Services markets this as “transparent” because it is called out plainly. The counterpoint: many flat-rate aggregators (e.g., Stripe, Square, PayPal) don’t list a separate administrative line. They recover those costs inside their blended rate (for example, 2.9% + $0.30), so you won’t see “$24” anywhere. That “no annual fee” claim is technically valid on the statement layout, but the overhead still exists—just priced into every transaction. Practical tip: whether the fee is separate or bundled, calculate your effective rate (total fees ÷ sales). That single number tells you which setup costs less.

Why Does Host Merchant Services Charge an Annual Fee?

Host Merchant Services uses an unbundled pricing model (Interchange-Plus). It breaks out every cost: interchange, assessments, processor markup, monthly fees, and the annual fee. This gives merchants a clear view of each charge.

By contrast, bundled or flat-rate providers combine wholesale costs and all overhead into a single percentage plus per-transaction fee (for example, 2.9% + $0.30). They still pay for 1099-K, support, and compliance, but those costs are hidden inside that single rate.

The key question isn’t “Does a processor charge an annual fee?” It’s “Which model—unbundled or bundled—yields the lowest total cost for my business?” A provider’s “no annual fee” slogan may oversimplify and obscure higher overall costs.

What Merchants Can Expect from Host Merchant Services

When you sign up with HMS, you’ll see:

• Monthly Account Fee: $14.99
• Annual Administrative Fee: $24.00 (1099-K reporting)
• Interchange-Plus Pricing: Wholesale rates plus 0.25% + $0.10 per retail transaction, 0.35% + $0.10 per e-commerce transaction
• No Early Termination Fee: Cancel anytime without a penalty
• No Separate AVS or PCI Fees: Address verification and basic PCI compliance support are included
• Optional Gateway: $5.00 per month for e-commerce connections
• Itemized Statements: Every fee—wholesale or markup—is listed separately
• IRS 1099-K Filing: Prepared and filed on your behalf

Even with clear line items, it’s wise to audit your monthly statement. Verify each charge matches your contract. Question anything unfamiliar.

Comparison to Industry Practices

Host Merchant Services uses an unbundled pricing structure. It itemizes charges such as the $24 Annual 1099 Reporting Fee and a $14.99 monthly account fee. Transaction pricing follows an Interchange-Plus model: Interchange + 0.25% + $0.10 for retail and Interchange + 0.35% + $0.10 for e-commerce. This model separates the wholesale costs (interchange and assessments) from the processor’s markup.

In contrast, flat-rate providers like Stripe and Square offer simplified pricing with no visible annual fee. Their rates (e.g., 2.9% + $0.30 online or 2.6% + $0.10 in-person) include built-in margins to cover support, admin, and reporting costs. While predictable, these blended rates can be more expensive for merchants with low average tickets or a high volume of debit transactions.

Some legacy processors still use tiered pricing, which groups transactions into broad categories like “qualified,” “mid-qualified,” and “non-qualified.” This method often results in higher effective rates through downgrades and lacks clear visibility into actual markup.

Subscription-based models, used by some modern processors, charge a flat monthly fee for access to near-wholesale pass-through rates and a small per-transaction fee. These models may offer savings at high volume, but the fixed monthly cost can be a drawback for smaller businesses.

Below is a table for better understanding:

Conclusion

A $24 annual fee is small. But it opens the door to understanding all card processing costs. True transparency means more than naming one fee—it means separating wholesale costs from markup and bundling. Compare unbundled models to bundled ones. Calculate your total annual cost before you decide. That way, you stay in control of your payment expenses.

Frequently Asked Questions