Credit card processing fees account for a substantial portion of monthly expenses for many businesses. Keeping processing expenses low is a very worth-while priority that requires consistent attention and diligence. This article covers five specific things that you can do to lower your monthly processing fees and keep them low.
Periodically test the market to ensure you have competitive rates and fees.
Merchant account providers can raises rates and fees over time. If you don't test the market, you will fall out of touch with what competitive rates and fees are. To keep your rates and fees as low as possible, periodically get processing quotes from other service providers. Web sites like CardFellow.com are a great resource for getting multiple quotes quickly and easily. CardFellow accounts are free and only take a few minutes to create. Once your account is created, providers are quick to send you processing quotes right online.
Stop leasing processing equipment.
Credit card processing equipment is not nearly as expensive as it was even five years ago. Leasing made sense when processing equipment was cost-prohibitive to own. These days equipment can be purchased for less than $400 and some providers even offer a free machine with a new merchant account. If you're currently locked into a leasing contract, research how much it will cost to end the agreement. If you have to buy out the remainder of the lease it may not be worth it to cancel. However, if your lease has a cancellation fee it may be less expensive to cancel the lease and purchase a terminal.
Negotiate your monthly minimum fee.
A monthly minimum fee is the minimum amount of processing charges that a merchant must pay their provider in a monthly period. In any month where processing fees don't equal the minimum, the merchant will have to pay the difference out of pocket. Businesses that have a substantial and consistent monthly processing volume won't be affected by a monthly minimum as much as businesses that process seasonally or that don't process a high volume. If you're paying monthly minimums on a fairly regular basis, call your provider and ask to have the fee reduced or waived. If they decline to work with you find another provider that doesn't charge a minimum.
Get two merchant accounts if you process card-present and card-not-present transactions.
Card-present businesses that process even a small amount of not-present transactions can reduce processing fees by getting another merchant account. When you're trying to save money, the suggestion to open another account may sound counterproductive - but the devil is in the details. When a not-present transaction is processed through a card-present merchant account the transaction downgrades to a higher processing rate. By opening a separate card-not-present merchant account to process not-present transactions, you'll avoid excessive downgrades and save on fees. Also, providers are usually willing to waive or lower statement and minimum fees one a second processing account.
Figure out why transactions are downgrading and take action.
A credit card transaction downgrades when it is assessed a surcharge called a mid or non-qualified fee. Knowing how many of your transactions downgrade is vital to saving money on credit card processing. Study your monthly processing statements each month to figure out how many of your transactions are downgrading. If you're unable to read your statement, call your provider and ask that they go through and explain the charges. Once you assess how many of your transactions are downgrading, call your provider and ask them to explain the reason for the downgrades.
Depending on the reason, it may be possible for your provider to make changes to your account to limit downgrading. Changing your processing habits may also help minimize downgrades. When you're processing credit cards, make sure to follow Visa and MasterCard guidelines for qualifying transactions. For example, always obtain a signature for card present transactions and take care to obtain an AVS match for card-not-present transactions.
When you contact your provider to ask why transactions are downgrading, they should be able to diagnose bad processing habits by looking at downgrades on your statement. Be sure to ask for their suggestion on how you can change your procedures to minimize downgrades.
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