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5 Ways to Lower Credit Card Processing Fees

HomeBusiness5 Ways to Lower Credit Card Processing Fees

You’ll be hard-pressed to find a single small business out there who will tell you they enjoy paying credit card processing fees.  

Every time a customer uses a credit card, a business is typically charged between 1.5% and 3.5% of the transaction amount. That means a business could pay up to $35 on a $1,000 transaction. When you consider how many transactions take place in a single year, you can see how these fees can weigh on a small business. 

Luckily, there are simple steps you can take as a small business owner to reduce the burden credit card processing fees pose on your small business. You’ll begin seeing savings in a matter of weeks. 

  • Pass some of the fees on to your customers  

Small business owners want to keep prices as low as possible while still posting a profit. But, credit card processing fees are a cost of doing business and can be factored into what customers are expected to pay for your company’s goods or services. 

Many states allow businesses to pass credit card processing fees on to consumers in the form of a surcharge. And, the number of states that ban surcharges entirely are dwindling. Still, even states that allow credit card surcharges usually have some restrictions in place. For example, you can’t charge surcharges for those who use debit cards. 

If you operate in a state where credit card surcharges are illegal, you can still encourage customers to use cash or check by offering them discounts. Take time to research your state’s laws for credit card surcharges and then work with the rest of your staff to build a surcharge policy that complies with state law while also meeting the needs of your business. 

  •  Prove your value to your credit card processing vendors

Credit card processing vendors want to partner with profitable companies. Their business model ultimately relies on it. You can use this to your advantage. 

According to J.P. Morgan Chase, the median small business has a cash inflow of $381 a day. If your company brings in significantly more than this, you should consider attempting to negotiate with your credit card processing vendor for lower rates. They likely consider your business a valued client and will make accommodations to retain you.

 If possible, shop for other credit card processing vendors to see what rate they are willing to charge you. If it is lower than what you’re currently paying, you will be in a strong position at the negotiating table with your current vendor.

  • Avoid paying PCI fees

All small business owners want to offer their customers secure payment services. Thankfully, it’s possible without being forced to pay a premium.

Many credit card processors charge customers PCI fees. In turn, they provide services to ensure your business complies with Payment Card Industry Data Security Standards (PCI DSS). While one could argue safeguarding customer and merchant data is worth the cost, experts say it is possible to find processors who provide secure payment services without forcing you to pay extra.

As you research retail credit card processing vendors, ask them whether they charge PCI fees. If you are struggling to find vendors who are a strong fit for your business that waive the PCI fee, use your transaction volume as leverage when negotiating. If a credit card processing vendor sees your company as a potentially lucrative client, they may be willing to waive the PCI fee. 

  • Build address verification into your payment process

Credit card processing vendors aren’t all that different from your business. Fraud cuts into their revenue, so they will do whatever it takes to minimize it. If your business is willing to take a few extra steps to prevent fraud, you may be in line for a discount on your processing fees. 

One way companies are fighting against credit card fraud is through Address Verification Services. When a customer swipes their card or inserts the chip, they are asked to enter the address associated with their credit card account. The address they entered is then compared with the address the bank that issued the card has on file. If the addresses match, the transaction will be approved. 

While all credit card companies have not yet opted into offering discounts for AVS adoption, Visa/Mastercard, one of the world’s largest companies, has. Companies that integrate AVS into their payment systems can expect to pay 0.30%-0.50% less on every transaction. 

  • Check your statements frequently 

It should be fairly clear at this point credit card processing fees are negotiable. Your business and the credit card processing vendor both benefit when you do well. But even after you negotiate lower rates, you need to remain vigilant. 

Oftentimes, credit card processing vendors gradually raise fees over the course of the year. As a small business owner who wears many hats, it can be easy to miss slight increases in credit card fees from one month to the next. Unfortunately, even tiny increases can add up over time. 

Put time aside in your calendar every month to look at your credit card statements. Carefully track the fees you’re being charged by the credit card processing vendor. A simple way of doing this is creating an Excel spreadsheet and comparing what you paid month-over-month. If you find rates are beginning to rise, contact your vendor. Don’t be afraid to go back to the negotiating table if the situation calls for it. 

Always be prepared to use your small business owner superpowers

Your small business is successful because you’re willing to sweat the details. From day one, you’ve been diligent about finding areas of savings. Credit card processing fees are no different. Dedicate a few extra hours a month to researching ways you can reduce what you owe. You can feel confident it will pay off in the long run. 

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William Powell
William Powell
William Powell is a writer and educator with a passion for marketing. He enjoys learning about the latest business trends and analyzing how global events impact domestic and international economies.


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