Business credit card processing fees can be a notable share of transactions and over a period of time add up to significant costs. The cost of receiving and processing money will impact on your bottom line.
However, there are a number of ways to cut credit card processing costs. Below you’ll find 13 cool tips for decreasing your credit card processing fees.
Check your PCI compliance
Payment processors know it's in their best interest that you offer cardholders excellent security of their data. If you can't treat their data securely, you may be able to get away with it for a while. However, you may have to pay additional fees for your high level of risk. According to payment compliance expert, River Cohen, you can avoid this situation by becoming PCI compliant. The payment card industry (PCI) consists of the organizations which store, process and transmit cardholder data. The security standards are developed by the PCI Security Standards Council. These standards were developed to increase security by businesses accepting credit cards, especially via their websites.
Always try to negotiate setup fees
Most payment processors charge setup fees. In some cases these fees are reasonable. In many situations payment processors are willing to negotiate or even waiver these fees. This is something worth keeping in mind when you choose your payment processor.
Enroll into the 3-D Secure system
If you accept online payments, you can save money on your card processing fees if you use the 3-D Secure technology. This technology requires the cardholder to enter a password in order to confirm the purchase before the transaction is completed. For Visa cards, this is known as Verified by Visa, while for MasterCard, it is known as MasterCard SecureCode.
Since these method decreases the risk of fraud, processing fees are smaller for transactions verified through 3-D Secure. For instance, Visa charges 1.30% for unsecured online transactions, dropping to only 0.87% for transactions using the Verified by Visa technology.
Get a dedicated merchant account.
E-commerce beginners may find it convenient to use PayPal or other all-in-one payment processors to accept payments via their websites. This may be convenient, but the processing fees are going to be higher than having their own merchant account. Even though you may need to pay a minimum monthly fee to have a standalone merchant account, you are still going to spend less on your card processing fees when processing higher volumes.
Ask the payment processor to review your fee
How long ago did you start your business? If you've been with the same payment processor for a few years, ask them to review your fee structure. You may be eligible for lower rates. It’s not a bad idea to contact your account manager to discuss your options.
Ask other providers for quotes
It's always good to know what the average rates the processors are providing. This is easy to check by sending out quote requests to several payment processors and merchant account providers. You can use this information to ask for a fee reduction with your existing provider.
Encourage the use of debit cards rather than credit cards
Accepting payments made with debit cards is cheaper than credit cards. Encourage clients to use their debit cards to benefit from lower processing fees.
Use AVS to reduce fraud
If you have to deal with fraudulent payments, you're going to support large chargeback fees. You can decrease this risk by using the Address Verification System (AVS).
When you use AVS, your clients are required to enter a billing address. The payment network performs a check in order to make sure the billing address provided is the same as the one they have on file with their bank or card issuer. If the two addresses aren't identical, payments may be rejected. This procedure reduces fraudulent payments thus helping you avoid chargeback fees.
Fraudulent payments screening
If you have to deal with a large number of fraudulent payments and chargebacks, contact your payment processor to ask for a screening solution. These solutions imply the use of certain rules for accepting a payment. They might even queue payments for manual review if needed.
Make contactless payments available for small amounts
Contactless payments have become extremely popular. Contactless payments are extremely quick, thus enabling businesses to serve clients much faster. In addition, their processing fees may be slightly lower. This is perhaps the best moment for you to upgrade your old credit card terminal, and get one with contactless support.
Encourage the use of contactless
There are people who have cards featuring the contactless technology, and yet avoid making use of it. You should suggest them to keep things simple and use contactless when available at the merchant.
Check your statement to see where you can save some money
Ask your payments processor to provide detailed statements of your activity. If you find items you don't understand, ask for an explanation. This can help you learn what type of payments have the highest fees attached and let you avoid them in the future.
Contracts with monthly minimums aren't suitable for low transaction volumes
If you've just started your business, you may only have to process a few transactions per month. Don’t sign up for long contracts with monthly minimum required volumes. These contracts are good for established businesses with many monthly transactions. Beginners should stick to credit card processors who don't charge a monthly minimum fee. Stripe and Square are a few options. Once you get bigger, you can always negotiate other types of contracts.
Knowing the ropes of credit card processing and implementing these tips can help improve your bottom line. As your transaction volume increases, you can use these savings to further grow your business.
Stephen Ball is a content marketer and freelance writer - if you wish to get in touch with him you can do so at LinkedIn
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