Credit card processing fees are the bane of some people’s existence. Yes, I am exaggerating a little bit but let’s face it, it is annoying as hell. But is there a way to offset credit card processing fees? Here, I will try to explain everything you need to get rid of this dastardly thing. Let’s begin.
First, Let’s Talk About Credit Card Processing Fees
A credit card processing fee, or sometimes it is called a discount fee or interchange fee, is an additional fee that payment processors or banks demand to cover the transaction processing fees. Sound simple enough, is it? Well the reason behind this fee is when you purchase something using your card, the transaction goes through several steps.
This fee is often a percentage of the transaction but it can sometimes be a flat fee. This fee is used to maintain and fund the infrastructure and services needed for the payment process. Thanks to this fee, fraud prevention, monitoring and customer support can be offered to you by these companies. So you might think it is a little bit necessary but you can thank this fee that you pay for those nice people in customer service.
The specific amount you pay depends on several factors like the card used, the merchant’s industry, volume of transactions and the agreement between the merchant and payment processor. Usually, merchants pay the cost. But sometimes they reflect those fees to customers without you even realizing.
A quick reminder: This fee is different from other fees that you might encounter like statement fees, monthly minimums, chargebacks or terminal rental fees.
Back to the Question: How to Offset Credit Card Processing Fees?
The thing is, like Thanos, these fees are inevitable. But you can often negotiate with the company to make them a little bit less annoying. You might try talking to your processor company and get the best deal that they can come up with. Trying to explain that with the high volumes of transactions you aim for, they can still get a good deal out of your business.
Also, you might add your own security measures to lower the risk of credit card fraud. Most of the time, these companies demand higher fees if you are susceptible to fraud. You can use a swiping method instead of inserting the credit card number by hand. Or you can demand some extra info from your customers to increase their security. Zip codes and security codes are two great options to require.
Additionally, you can lower your processing fees by setting up your account correctly. If you don’t provide some critical information like your business and transaction types and frequency of those transactions correctly, you might have to pay some extra fees. Here’s another big tip: Process your transactions every day. It is usually cheaper to do it daily.
It is always a good idea to consult an expert and I am, unfortunately, not considered an expert. Most smaller business owners don’t know anything about credit card processing. But here’s a great tip that could save your bacon when you negotiate with a processing company: All of those companies have to buy their rates directly from Mastercard, Visa, Discover and similar companies. So they can add some profit to those rates and sell it back to you. That means, you can always try to negotiate with those guys.
Let’s Wrap It Up
All in all, you cannot escape from these annoying little fees. Yet, there are a couple of things you can do to make them less annoying. You can try to negotiate, increase your security measures, set up your account correctly and get some external help when negotiating. If you are running a business and want to increase your profits without bothering your customers, you can instead bother these processing companies with these tips to get the best deal. Good luck! See you next time.
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