How To Save On Credit Card Payment Processing

There are four main types of fees for credit card payment processing, each covering the cost of a different service. 

1. Interchange Fees: Interchange fees compensate card-issuing banks for the costs associated with providing credit or debit card services, including managing accounts, preventing fraud, and maintaining the payment infrastructure. The card network (Visa, Mastercard, etc.) dictates the fee amount and typically expresses it as a percentage of the transaction amount plus a flat rate.
2. Assessment Fees: Unlike interchange fees that you pay to card-issuing banks, assessment fees go directly to the card networks. The card networks use these fees to maintain and improve their payment infrastructure, ensure the security of transactions, and facilitate communication between merchants and card-issuing banks. Again, the card network sets the fee and expresses it as a small percentage of each transaction.
3. Payment Processor Fees: Payment processors include Stripe, PayPal, and Square. They charge businesses for card terminals, customer support, chargebacks, transaction authorization, and other related services. Some payment processors may charge flat rates, while others may take a percentage of the transaction amount.
4. Monthly Fees: Monthly fees may go to a payment processor or merchant service provider. The amount is typically the same each month, regardless of the volume or value of transactions, and often covers services like customer support, account management, and access to reporting tools. If your business rents payment processing equipment, that cost could also be a monthly fee. 
   

Now that you understand the different types of credit card processing fees, you can review your current terms, negotiate where possible, and seek money-saving alternatives. Here are a few ways you can get started:

Negotiate with Processors

Feel free to negotiate with your payment processor or merchant service provider. Ask if they can lower their transaction fees, waive certain monthly fees, or offer a better overall rate based on your transaction volume or business type. Many companies are willing to give better rates to long-time customers who have accounts in good standing.

Review Monthly Statements

Don't set and forget your payment processing arrangement. Regularly review your monthly statements to check for unexpected fees or rate increases. Call your payment processor if anything looks out of the ordinary, ask for clarification, and negotiate a different rate.

Shop Around for the Best Rates

Don't settle for the first payment processor you come across. Research multiple providers, compare their fee structures, and seek lower rates based on your business's demands and transaction volume.

Understand Your Pricing Model

Some processors offer tiered pricing models, in which transactions are grouped into different categories based on factors like card type and transaction method. You may also find different structures for interchange fees, such as a percentage or a flat rate. Compare your model to others, and see which makes the most sense for your business.

Use Business Management Software with Integrated Payment Processing

Using operations management software with integrated payment processing means paying transaction charges and software fees to the same company. Additionally, you will have one point of contact whenever you need help with setup, troubleshooting, or general questions. Bundling the fees and services this way can save you money and ensure smooth payment processing operations.