How to save money on business’ credit card processing fees
Accepting credit cards can be a great way to generate more business for your company, but it's also a transaction that comes with a cost. Depending on where you do business and how many transactions you process, those costs can add up.
Your processor is likely charging something called interchange fees as well as monthly fees and some other processing charges. The good news is that there are ways to reduce the costs you pay. You simply need to understand all of your options and ask for better deals.
Credit card processing fees are one major source of cost when it comes to accepting credit cards. Interchange fees, merchant account service fees, gateway fees, statement fees and others will add up over time. Here are some ways you can reduce your credit card processing fees.
While business owners can't avoid these fees, here's a list of what they can do to lower their credit card processing fees and save money.
Surprisingly, not many business owners know that they can actually negotiate credit card processing fees. The key to a successful negotiation is confidence. You need to be seen as a business that adds value. Doing so will make the credit processing company want your business.
Here are some things you need to consider to get the terms you deserve and keep the negotiation deck in your favor:
- Know what your business needs. Determine the volume of transactions your business usually processes and whether you are deemed a high-risk establishment. Also, figure out what type of card payments you deal with a lot. Knowing your business and what it needs can help you cancel services that would not be compatible with it.
- Take the time to shop around. Multiple quotes and rates are the best-negotiating tools business owners can arm themselves with before deciding.
- Get a pricing quote. If possible, you need to ask for a pricing quote. Getting one should be simple if you know your credit card processing needs.
Mitigate Credit Card Fraud Risk
Note that the higher the risk for credit card fraud you pose as a business, the higher the fees. You can reduce the risk by entering security information and swiping credit cards. According to a credit card processing company, merchants should swipe as many cards as possible.
It's because the interest rates allocated by card brands like MasterCard and Visa are higher when they're put down based on fraud risk. There shouldn't be any excuses not to swipe cards with new tools and technology offered by credit processing service providers.
What's more, business owners can lower the risk of card fraud by equipping tight security information that safeguards the cardholder and authorizes the purchase. One way to do this is by entering the security code and billing the ZIP code when prompted.
While this may seem like a minor inconvenience, overlooking this step could cost a sales loss to your business.
Set A Minimum Fee for Each Customer Credit Transaction
Some business owners decide to set a minimum fee for each credit transaction, let's say $15. In this way, when consumers are faced with a purchase minimum, they can either spend more or turn to cash.
Your business can benefit from both options. If customers spend more to use credit, the extra earnings can offset the hefty credit card processing fees. On the other hand, merchants can avoid processing fees altogether if customers use cash.
Set Up Your Account and Terminal Properly
Often, one simple mistake can lead to hefty fees. You can avoid this by properly setting up your account from the start. If the account is set incorrectly, you risk getting higher fees from providing the wrong business information.
Additionally, the way your terminal is installed and configured affects credit card processing fees. Experts suggest processing credit transactions within twenty-four hours, lowering the volume of transactions for that particular period. Hence, reducing processing fees.
Daily batch processing is more cost-effective than every other day. The longer you wait to process transactions, the higher the rates and fees.
Read the Fine Print
Determine if you will have to pay any fees if you stop accepting credit cards or change processors. Most providers enter a penalty clause in the contracts. Ensure to read the print thoroughly and understand all fees associated.
If there is a dispute, remember that the issue will be resolved based on the contract, not your words and the credit card processing company. Also, it would be best to read merchant reviews for business owners to know more.
Nowadays, customers expect businesses to accept debit and credit card payments. That's why business owners must work with a credit card processing company to get the most of their sales. But take note that a credit card processing company often involves a lot of fees such as interchange, assessment, and payment processor markup fees.
Aside from these transaction fees, businesses may encounter incidental fees caused by specific actions like voice authorization, AVS, batch, and chargeback fees.
Photo: Tim Samuel from Pexels
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