How to Save Money on Credit Card Processing Fees

It’s almost impossible to operate a business without accepting credit cards these days. Unfortunately, credit card processing fees eat into small business profits, so a lot of business owners are looking for ways to minimize their expenses and maximize their profits while still offering their customers the most convenient ways to pay.

If credit card fees are killing your small business, here are some things you might want to try.

Negotiate, negotiate, negotiate.

You can shop around for competitive rates and actually get merchants to lower their processing fees. However, you will have to do your homework and use a competitor’s rates as leverage. If you are already working with a merchant and find a better rate elsewhere, ask them if they are willing to beat their competitor’s fees in order to keep your business. You might be surprised how easily you can get them to lower your fees.

Consider bank merchant services as a last resort.

In most cases, you’ll find that banks don’t actually offer in-house merchant services. They use another company’s services instead. That means the bank marks up the fees, essentially becoming a middle man. That costs you more money. Try to avoid this, if possible, and always do your research into the bank and associated fees first.

Go with a stable fee structure.

Some merchant’s fees vary, meaning you can’t accurately budget what your processing fees will be from month to month. Avoid these merchants, and opt for a company that provides standardized rates.

Read the fine print.

Just like with phone companies and cable companies, merchant service providers try to woo new customers with unbelievable introductory pricing. Sometimes switching is a good decision, but you won’t know unless you investigate all of the details. Is there a minimum contract for services? Just how much will rates go up after the introductory period is over?

Avoid minimum length contracts.

Merchants that require your loyalty or else charge you a fee for leaving are bad news. What they are essentially saying to you as a customer is, “We reserve the right to offer poor service, because we’ll charge you if you want to leave us for another provider.”

Don’t accept credit cards at all.

This may not seem like the most convenient choice for your customers, but there are ways to make payment processing easy without taking credit cards. Service-based businesses in particular may want to look into accepting electronic fund transfers directly from a customer’s bank account.

The smartest business owners manage their company’s expenses by thinking like a consumer. They shop around, they keep their eyes peeled for the catch, and they aren’t afraid to ask for a better deal.

As you look for ways to reduce the amount you are spending each month on credit card processing fees, keep these tips in mind. But don’t stop there. Evaluate other areas of your company’s operations. Are there more ways you can save money by applying these tips?

Have you recently switched merchant service providers? What prompted you to make the change?

Image credit: intuitives

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Emily Suess
Emily Suess is a full-time technical marketing writer in the software industry and a part-time freelance copywriter. To learn more about marketing your small business online, check out her copywriting blog, Say It With Me.


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  1. I accept PayPal, but their percentages can be difficult do stomach sometimes. I either build the percentage into my client fee or eat it. Your advice is helpful, though, if I decided to use a full-on processor, especially the negotiation advice!

  2. The key to lower credit card processing fees lies in the pricing model the processor uses. Negotiation will lead to frustration if the processors that you’re comparing are using a tiered or bundled pricing (qualified, mid-qualified, non-qualified rates).

    Interchange pass through pricing is the least expensive and most transparent form of credit card processing pricing, and it’s the only one you should consider when shopping processors.

    Interchange pass through should be mentioned in this post under “Go with a stable fee structure.”

  3. Emily just came across your post on Google+, lots of good information. It is increaingly difficult to be a small business owner in today’s world with some many “partners” are trying to squeeze your own margins to make their profits. Reviewing and finding the right merchant account provider is an easy way for many small business owners to get some relief.

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