Money Saving Tips for Credit Card Processing Fees
Entrepreneurs and small business owners juggle dozens of tasks and issues daily to keep their businesses afloat and profitable. So, it is no surprise that researching ways to save money on credit card processing fees falls to the bottom – or off – the To Do list.
Processing fees are similar to a slow water leak: it’s a slow drip you know about but ignore as you rush through each day. But over a year’s transactions, that little leak deals a significant blow to your bottom line. Transaction processing fees are the most familiar charges along with assessment fees, authorization costs, chargeback fees and others that sneak into your statements if you aren’t paying attention, creating a complicated, expensive mess.
If you are dedicated to serving your customers, accepting credit cards is a necessary evil for your business. However, you can take a bite out of those charges by adopting these tips.
- Leverage your processing volume.
The more you sell, the more processing you generate, adding value to your merchant profile with your payment processor. Make sure that you are getting appropriate credit (in the form of reduced rates) for the volume you are processing with your payment vendor. Credit card payment vendors are a middle link of the processing chain; they can negotiate with their providers for lower rates based on your current volume. As your business increases and you ask for better rates, the payment vendor has a better negotiating position to lower their overhead and pass the savings along to you.
“When a business owner proves to me that their transaction volume is strong and rising,” Mike Krause of Sales Sense Payments observed, “I can use that to negotiate better rates for my merchants, ensuring their loyalty and saving them money in the process.”
- Take a bite out of fraud.
If a payment vendor believes your business is a higher than normal security risk, your processing fees will reflect that fact. With chipped credit cards becoming pervasive in the United States, in-person card transactions should be the most secure. Next in the security hierarchy, is swiping credit cards and entering basic security information such as the billing Zip code and CVV (card verification value or security code) from the back of the card. If a credit card’s 16 digits and security code must be manually keyed, the rate per transaction rises because the payment provider’s risk profile increases, even for inadvertent mis-keying the numbers.
This step alone can protect 1 percent of the transaction value for your business. Again, not a big number by itself but each lost percentage point adds up.
- Check the address.
Another step you can take to reduce your exposure to credit card fraud is by using Address Verification Service (AVS). Address Verification Service confirms the customer-keyed address matches the address on file at the credit card company. This valuable service is essential for preventing fraud for online (card not present) purchases, including limiting merchant chargebacks.
When an entered address matches what’s on file, the card-issuing bank transmits a unique AVS code to the merchant, which is then used to authorize or deny the transaction.
Globally, Visa and MasterCard fully support AVS; in the U.S., Visa encourages AVS use by offering merchants lower interchange rates on transactions confirmed with AVS, another money-saving opportunity.
- Start well, process well.
When you initially set up your merchant services account, ask enough questions to ensure you are enrolled accurately. Your business categorization, types of transactions you accept and the frequency of transactions all figure into your specific fee structure. Be sure you understand the implication of your answers and inspect how your account is set up. While credit card processing can be complicated, you owe it to your business profitability to completely understand the charges and process thoroughly.
Further, your business process and policies will affect the processing fees you pay. Process your transactions for a given business day within 24 hours. Batching your transactions each day is more cost effective than holding transactions for a couple days or even once a week. The less frequently you process your transactions, the higher the rates and fees you are charged. Get in the habit of daily transaction batching.
- Ask, ask, ask.
You started your business because of your talents in a particular area, not because you knew everything there was to know about credit card processing. You are not alone! However, you can research the topic and work with your payment provider to get sufficient knowledge to ensure your business is in control of its expenses. Your payment provider is a middle link in the transaction processing chain and their knowledge and relationship with their suppliers is an asset you should lean on.
This sort of insider information, and having an expert payment provider working with you, can help you process credit card transactions efficiently and economically. Switching among processors to squeeze a little savings isn’t worthwhile. However, make your payment processor representative an ally in your business to reap better rates and a more satisfying experience.
For more information on merchant credit card processing services, contact Mike Krause at 585-704-6453 or visit SalesSensePayments.com.