5 ways to lower credit card processing fees
Unfortunately, you can’t avoid credit card processing expenses, but merchants can take steps to save thousands of dollars each month.
1. Negotiate with credit card processors.The best way to negotiate with payment processors is to be seen as a merchant that adds value, thus making the vendor want your business, said Willie De Leon, director at Grove Bay Merchant Services, a merchant service provider.
You can negotiate with credit card processors by leveraging your transaction volume. This is because the more you sell, the more transactions you perform, and the more value it adds to the processor, De Leon said.
Processors can negotiate with their suppliers based on the volume their client’s process. The more transactions they process the more negotiating power they have to lower their costs with the acquiring bank.
2. Reduce the risk of credit card fraud.
The higher security risk you pose as a merchant, the higher your credit card processing fees will be. You have two primary ways of reducing the risk for credit card fraud: swiping credit cards and entering security information, said Karl Diaz, president at Evolution Payment Systems, a credit card processing company.
“Swipe as many cards as you can,” Diaz said. That’s because the rates set by card brands like Visa and MasterCard are higher when the cards are keyed in based on fraud risk, he explained. “With new technology, like cell phone swipers offered by full merchant-service providers and microprocessors like Square, there are few excuses to not swipe the majority of your cards.”
Merchants can also lower the risk of fraud by implementing Payer Authentication which provides authentication between the card-issuing bank and the cardholder and validates the authorization. Another less effective way is to always validate the billing ADDRESS and ZIP code and CVV code.
“This seems like a small nuisance, but bypassing this step could cost your business over 1% of each sale,” he said. “Similar to keying in sales, forgoing this process means a higher rate due to fraud risk.”