5 Ways to Save on Credit Card Processing


In today’s market, consumers are using less cash and relying more on credit cards for their transactions.

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According to the Federal Reserve, credit card payments registered the highest growth rate by number (10.2%) among the core payment types from 2015 to 2016.

With more and more customers choosing plastic over cash, as a  business owner, failing to accept credit cards isn’t in your best  interest.

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But if you aren’t careful, your business’ processing fees can  quickly add up. According to the U.S. Small Business Administration, typical merchant account companies can charge up to 5% on all of a  company’s earnings from credit card sales, which can include the  following fees:

  • Fee from the issuing bank: Known as an interchange  fee, it is a percentage of each transaction. How a payment processor  handles the different interchange fees will determine the rate your  business pays.
  • Fee charged by the credit card providers: All providers (Visa, MasterCard, Discover, etc.) charge an assessment fee for every transaction.
  • Fee charged by the payment processor: In addition,  your payment processor may charge additional fees for chargebacks,  monthly minimum/maximum, as well as account start up and cancellation  fees.

While credit card fees are inevitable, with proper planning, you can  reduce these fees and save up to hundreds of dollars every month.

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Use  our 5 tips below to help you cut some unnecessary costs from your credit card processing fees.

Tips to Reduce Your Credit Card Processing Costs

1. Do Your Research / Set Up Your Account Properly

Sometimes small mistakes can lead to higher credit card processing  fees.

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Because the type of business, type of transactions, and frequency  of transactions impacts your fee structure, it’s important that your  account is set up properly from the beginning.

You should also thoroughly research your options to ensure you choose a structure that caters to your business and your consumer’s buying  habits.

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If your business sells big-ticket items, choosing an interchange plus pricing system may help you save money compared to a flat fee  payment processor. If your customers frequently use business credit  cards, you’ll want to rule out the tiered pricing system, to avoid that  expensive, non-qualified rate.

2. Reduce Risk of Credit Card Fraud

The higher the security risk you pose as a merchant, the higher your  processing fees will be. Reduce your risk of credit card fraud by  choosing to swipe/insert credit cards over manually entering the  information.

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Credit cards’ microchips and magnetic strips have built-in  security features, while manual transactions are more susceptible to  fraud and human error. In fact, some banks charge more when card  information is input manually.

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If you have to input the information manually, be sure to provide the security information that protects the cardholder and validates the  purchase, for example, the billing zip code and security zip code. This  can help reduce the risk of fraud, which helps reduce your fees.

3. Set Credit Card Minimums

If your business handles small transactions, you may want to think  about setting a credit card minimum for your customers, especially if  your business uses the interchange plus pricing or the tiered pricing  system. Setting a minimum can help reduce your credit card processing  volume, which can keep your processing bill down. It’s important to not  set the minimum too high though; you don’t want to deter your customers  at their point of purchase!

4. Process Transactions Everyday

It is essential that you set up your terminal correctly. Many  businesses are unaware that they are paying expensive processing fees  because they are allowing their transactions to stack up throughout the  week. When you wait multiple days to process transactions, the volume  appears higher for that period, causing a spike in the processing rate.  Getting into the habit of doing your batch processing at the end of each day helps lower the number of transactions per period. This will help  you secure a better rate.

5. Ask for Help

Understanding all of the different variables that go into credit card processing rates can be tough, especially for business owners who are  juggling multiple other roles. Speaking with an expert can help guide  you through your payment processing options and ensure that your account is set up correctly.

Most experts would recommend negotiating lower rates with your  payment processor, especially if you’ve been working with them for an  extended period of time and you’ve increased sales. Your provider isn’t  going to want to lose business to a company that is on the rise!

There are several factors to consider when it comes to your credit  card processing. While credit card processing fees are unavoidable,  following the tips above can help save your business money.

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