As a local business owner, finding ways to reduce costs while maintaining excellent service can significantly impact your bottom line. One area where potential savings often go unnoticed is payment processing fees. Here’s a guide to help you understand how to lower these expenses without compromising on the payment solutions your customers expect.

Shop Around for the Right Processor

Not all payment processors are created equal. Before committing to a processor, compare rates from multiple companies. Be aware of all the fees such as monthly charges, interchange rates, transaction fees, and hidden charges that could add up quickly. Also, look for providers specializing in businesses of your size and industry; they may offer tailored solutions with better rates.

Process with a trusted partner, contact Treasure State Payments.

Negotiate with Your Current Processor

If you already have a processor, don’t hesitate to negotiate for better terms. Processors want to retain your business, and if you can present competitive quotes from other providers, they may lower their rates to keep you as a client.

Consider Tiered vs. Interchange-Plus Pricing

Tiered pricing offers different rates based on transaction types (qualified, mid-qualified, and non-qualified). Whereas, interchange-plus pricing separates the interchange rate set by credit card networks from the processor’s markup. Depending on your transaction volume and types, one model may be more cost-effective than the other.

Optimize Payment Methods

Certain payment methods have lower processing fees than others. Encourage customers to use debit cards over credit cards, as debit transactions typically carry lower fees. Also, for larger transactions, consider offering ACH or eCheck payments, which usually cost less than card payments.

Reduce Chargebacks and Fraud

Chargebacks and fraudulent transactions lead to additional fees. Implement fraud prevention tools like Address Verification Service (AVS), Card Verification Value (CVV) checks, and secure your point-of-sale system with encryption and tokenization. Educate staff on proper card acceptance procedures to minimize the risk of chargebacks.

Eliminate Unnecessary Fees

Review your monthly statements carefully to identify any fees that seem unclear or redundant. If you spot fees for services you’re not using, such as PCI non-compliance, ensure your business meets compliance standards. Discuss with your processor to see if they can be removed.

Utilize Minimum Purchase Requirements

Depending on the rules set by your card network, you may be able to set a minimum purchase amount for card transactions. This strategy can reduce the impact of per-transaction fees on small-ticket items.

Bundle Services for Discounts

If you’re working with multiple providers for different services like online payments, POS systems, and eCommerce, you may be able to bundle these services with one provider at a discounted rate. Many payment processors offer comprehensive packages that could lower your overall processing fees.

Lowering your payment processing fees requires a combination of strategic planning, negotiation, and an understanding of your business’s unique transaction patterns. By exploring these strategies and continually reviewing your payment solutions, you can minimize costs and enhance profitability. Remember, a modest reduction in fees can translate into significant savings over time, so it’s worth the effort to explore these opportunities.

Process with a trusted partner, contact Treasure State Payments.