Did you know that the inventor of the first bank-issued credit card is John Briggs? He’s a former banker from New York State.
Are you a business, and are tired of wracking up credit card processing fees? Those fees cut into your profit, and cause you to earn less than compared to those who pay with cash.
Is there a way to lower those fees you might wonder? In this article, explore all about those pesky credit card processing fees, and if there’s a way around them. Read on to discover these tips and tricks you won’t want to miss out on to save more of your hard-earned cash.
What Are Merchant Credit Card Processing Fees?
If your business accepts credit cards for purchases, there will be what’s known as a processing fee. Since it can add up quickly, some companies will reward those paying with cash by offering a slightly lower rate.
The added fee for credit card users is known as credit card surcharging. Processing fees include payment processor’s markups, interchange fees, and service fees.
What Are Assessment and Interchange Fees?
Your interchange rate is what tends to make your credit card processing fee as high as it is. This is the fee that the acquiring bank pays to the issuing bank when someone makes a purchase. They’re normally a portion of the sale amount, or a percentage plus a fixed rate.
Some factors can make them vary such as how you process your payments, the card’s brand, the merchant, and type of card. Each purchase will also have an assessment fee. The assessment fee is how the card’s networks make money. In addition to these, there’s an additional fee that you’ll need to pay to your payment processor for services.
You’ll have rental fees or terminal leases on a recurring basis depending on the processor. Certain processors will have you sign a long-term lease or rent for a period of time.
You might have an annual or monthly fee. There might be a minimum processor fee every month as well.
1. Payment Terms and Processes
First, it’s a good idea to look around for a payment provider, and don’t just go with the first option. Do a comparison, and take a look at the different phrases and words you’ll see for each option.
2. Shop Lowest Markups
Next, take a look at different markups. Since there are many factors that’ll go into the different rates, it’s a good idea to take a look at what’s negotiable, and what’s not. For example, assessment and interchange fees are non-negotiable elements.
Markups can be controlled. This is the amount you pay in addition to fees that go to card networks and banks. It’s a good rule of thumb to not go by rates, but instead, by markups.
Processors should be able to tell you the markup rate, and if they can’t, that’s not a good sign. You’ll want to identify those who have a smaller markup since rates don’t give you a full understanding of the cost.
3. Lower Fraud Risks
In order to lower your rate, you’ll want to reduce your risk of fraud. When you have a higher fraud risk, you’ll receive higher processing fees.
Never key in the card information since that increases your risk of fraud. Instead, swipe credit cards. Swiping the credit card has a lower risk of fraud.
4. Address Verification
When you can, it’s a good idea to enter the security code and billing zip code. Address verification will verify the address of the cardholder which will reduce your risk of fraud.
You can set up an address verification service in order to check the cardholder’s address. This is great in reducing chargebacks as well.
The way an address verification service works is, your potential customer will enter their address. The service will do a comparison of that address, to the address on file with the bank.
You as the merchant will then receive a code to either reject or authorize the transaction. Certain companies will provide lower interchange rates when you have this service.
5. Speak With an Expert
If you’re looking for a credit card processing fee calculator, it’s a good idea to speak to an expert. Speak with a credit card processing expert to have a better understanding of the process and different fees.
Many processors will buy their rates straight from a credit card company and have the potential to resell these rates to other companies. This means that you don’t have to always switch vendors to receive a lower fee. An expert can look into a lower fee for your current service.
You can negotiate credit card processing fees by showing your transaction volume to the experts. The more items you sell, the more a credit card processor will make. Due to this, they’re more likely to reduce the cost of your fees based on the current volume of your sales.
7. Don’t Wait
Don’t delay on lowering your credit card fees today. When you wait to obtain a lower rate, that means higher fees you’ll be paying overtime, and less of a profit for you.
Understand how the industry works, and know your payment metrics before proceeding. Determine the pricing model you like best, and then speak with the different vendors.
Exploring How To Lower Credit Card Processing Fees
Now that you’ve explored how to lower credit card processing fees, you should be ready to obtain lower rates than you currently have. Would you like to read more business content? For everything from business to money, check out our other articles today.