7 Tricks to Reduce Card Processing Fees

7 Tips to Reduce Your Credit Card Processing Costs

If you own or operate a business that accepts credit card payments, you will have to contend with processing fees as a cost of doing business. Of course, there are ways to offset your fees; however, many businesses still accept the fact that the fees are part of the process.  One of the ways you can optimize your efficiency and boost your bottom line is by keeping these fees as low as possible. There are several methods and techniques you can implement to accomplish this, as we’re going to delve into.

Let’s jump right in.

Understand What Your Actual Charges Are

In order to arrive at your actual charges, you need to request that your acquirer provides your most current statement and then deduct actual deposits from the settlement totals. By seeking a detailed report of the downgrades and surcharges, you will be in a position to identify what’s causing any extra charges quickly.

Ensure Your Account is Reviewed Periodically

One of the most widespread reasons leading to high processing fees is that merchants do not pay attention to the fees.  Understand that credit card fees do not go down, and be vigilant to recognize added fees and rate increases.  The acquirer should be transparent and willing to provide a detailed explanation of all charges.

Provide the Required Contents

Certain data fields need to be included in the case of Level 2 and Level 3 transactions, such as tax amounts and destination zip codes. These are typically business-to-business (B2B), although corporate purchasing cards might not be readily identified. When required fields are not included in these settlements, you might incur higher charges.

Make Use of the Right Methods

Credit card processing fees are a function of the risk associated with the transactions, meaning that riskier payments cost more. For instance, transactions where employees have to manually type in card numbers rather than have the customer insert their chipped cards into EMV terminals, are considered riskier, thus attracting higher charges. If you wish to keep your charges low, it’s important to select the most appropriate method for your case.

Take Measures to Reduce Fraud

There are various ways you can minimize the occurrence of fraudulent charges. If you can demonstrate that you are implementing such measures, many processors will be willing to reduce their processing charges. One simple method, which should be standard practice for all businesses, is to perform address verification on all transactions. By doing this, you will attract the best possible processing rates.  Always include the address verification on card-not-present (CNP) transactions.  Skipping the street number and/or zip code will increase the cost of the transactions.

Minimize Costly Chargebacks 

One of the biggest culprits behind high processing fees is the prevalence of chargebacks. A business that attracts numerous chargebacks will be considered a riskier organization, thus attracting higher processing fees. There are many ways to prevent disputes, including:

  • Ensuring that your company’s name on your merchant account is highly visible and recognizable
  • Collect any pertinent details with each transaction, including zip codes, street addresses, as well as security codes
  • Wherever possible, ship your products directly to your client’s billing address
  • Hold on to all the transaction details you collect, as this will be useful whenever chargeback scenarios occur
  • Have customers agree to detailed terms and conditions on special orders and card-not-present transactions

Offer a Discount for Cash Sales

The concept of cash discount and surcharges allow many business owners to pass along the card processing fees to their customers.  Most businesses offering these programs have reduced their fees significantly while maintaining customer loyalty.  Be cautious to ensure the programs are set up properly to be compliant in your area.

Final Thoughts

While there is no universally standardized pricing scheme when it comes to credit card processing, it’s up to us to make our own evaluations and comparisons to ensure that we’re getting the most attractive rates possible. While the differences between acquirers might seem slim, they add up over time, especially in high-volume industries.