How Businesses Can Lower Credit Card Processing Fees

two person holding credit card closeup photo

Accepting debit and credit card payments is a necessity for business owners. But before they can accept such payments, business owners need to open a merchant account. Moreover, they need to sign a payment processor agreement.

The payment processor will help business owners process purchases, while the merchant account allows them to accept electronic payments. Each debit or credit card transaction carries a credit card processing fee, which can quickly add up when overlooked.

These fees include minimum, gateway, and statement fees. Also, there are hidden fees that can inflate costs. Knowing these fees and striving hard to reduce or eliminate them is essential.

Choose The Best Credit Card Processor 

First and foremost, business owners need to choose the best credit card processor. They should not sign on to a payment processor just because they are familiar with them or referred by friends.

There are a few key factors to consider when choosing a credit card processor. The first is the company’s fees. Business owners should be aware of the different fees that processors charge, including the monthly, statement, and per-transaction fees.

Another important consideration is the company’s customer service. Business owners need to reach customer service representatives easily if they have any questions or problems. The company should also offer 24/7 support.

The final factor to consider is the company’s processing time. Business owners need to ensure that the processor can handle their type of business and that transactions are processed quickly. The processor should also be able to handle high volumes of transactions.

Business owners are likely to find that many credit card processors offer similar services at different prices, so choosing the best one for their business will take some research. The company’s reputation and size may convince a business owner that it is worth paying more money – or less – than another company.

Alternatively, check out Smartpay and their Zero-Cost™ EFTPOS product. This EFTPOS machine allows you to continue accepting credit cards without transaction fees, helping your business reduce overheads and save.

Negotiate Your Credit Card Processing Fees

It isn’t easy to negotiate credit card processing fees. With so many things involved, it can be tricky to understand the fees and if they’re negotiable. Business owners may find it hard to get the lowest cost possible if they don’t understand them. 

So, go over the credit card processing statement to discover fees that can be lowered before contending with your processor. Keep in mind that when negotiating, knowledge is power. Get a merchant statement analysis or audit to help you learn more about processors and comb through everything. The goal here is to expose where you’re getting overcharged and save money from your processing costs. 

Every processor has different policies, so business owners need to read and understand these before signing up. For example, some processors will only allow you to use their merchant account services if you also process through their gateway. It is something you should be aware of when choosing a processor.

Keep Chargeback Rate Low

Business owners can also lower their credit card processing fees by keeping the chargeback rate low. If business owners want to maintain a good account relationship with processors, they must keep the chargeback percentage below one percent. Higher than this means increased costs, and more work needs to be done for it to remain at an acceptable level.

When a chargeback does occur, business owners need to provide evidence that the disputed transaction was authorized. It usually is in the form of signed documentation from both the customer and the merchant. If all goes smoothly and an agreement is made, the funds are released to the business owner minus a fee.

Utilize Technology

For example, use an online shopping cart on your website to accept credit card payments. It will eliminate the need for an order form and help cut paper costs, printing fees, postage, and other factors that can add up over time.

In addition, you can use a mobile app or text message payment apps to process transactions while on-site at events like trade shows and provide customers with a convenient way to pay. In addition, you can use email receipts to save on paper costs and help maintain the accuracy of records.

Use The Right Payment Gateway

A payment gateway serves as an intermediary between a merchant account and card brands like MasterCard, Visa, Discover, and American Express. It routes transaction information to each brand for approval before transferring funds from your bank account or processing through a credit line.

Avoid high-cost gateways by choosing one that offers low or competitive rates or doesn’t charge per-transaction fees. Gateways like PayPal and Authorize.Net offer low-cost solutions with various features to fit most business needs without costing extra money in the long run.

Payment processors also offer gateway services bundled together for added convenience at an affordable price point, which can be an excellent option for small businesses.

To Wrap It Up

Credit card processing fees will usually cost around 3% of each transaction’s total. For example, suppose you made a sale of $100. This means you will pay $1 in credit card processing fees. These fees can be costly if neglected and can eat away at your business’ finances. That said, be sure to focus your efforts on getting the best rate.