How to lower credit card processing fees

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Learn how to lower credit card processing fees with our expert tips and strategies. Save money and maximize your revenue today.

Sekure Payment Experts · Accepted Answer

If your business is accepting credit card payments, you’re probably losing a big chunk of revenue to your credit card processing fees. For example, if you’re doing a million dollars in sales each year, credit card transaction fees could be costing you $40,000 or more. So, you want to make sure your business is processing payments in the most cost-efficient way possible.The average credit card processing fee lands somewhere between 1.5% and 4% of each transaction, but there are also other fees to take into account. What you’re ultimately paying is made up of three different components:Interchange fee: The interchange fee is the merchant discount rate that you pay to the bank that handles the credit card, such as Chase, Citi, Capital One, etc.Assessment fee: The assessment fee is the cost charged for using particular types of credit cards, such as Visa, Mastercard, American Express, etc.Payment processor fee: The payment processor fee is what the company handling card processing charges.Several variables can also impact the cost, such as:The credit card provider that is usedThe type of credit cardThe merchant code (MCC)Whether it’s card-present or card-not-presentThe payment processor you chooseHidden transaction fees that can show up on your statementYou may wind up paying more depending on how you manage your payment processing, chargeback or dispute fees, and whether there are monthly minimums. It can get complex — and expensive — quickly, reducing your cash flow and your profit margins.In this article, we’ll take an in-depth look at credit card fees and show you ways you can save on credit card processing.How much are you paying in credit card processing fees?Figuring out how much you actually pay each month is not as simple as it sounds. Depending on the payment processor you choose, you may see flat rate fees, lump sum fees, or per-transaction fees that are deducted from the amount. If you’re not sure exactly what you’re paying, you should consult with payment processing experts at Sekure Payment Experts to analyze your statement.While rates can vary and are subject to change, here are the typical rates you may be paying for both interchange fees and assessment fees for major providers:Card providerInterchange feeAssessmentAmerican Express2.5% - 3.5%0.165%Discover1.55% - 2.5%0.14%MasterCard1.5% - 2.6%0.1375%Visa1.4% - 2.5%0.14%Then, there are the fees that payment processors charge which can typically be flat-rate, or interchange-plus pricing.Flat rate pricingFlat rate pricing refers to a standard rate for all transactions, irrespective of the type of card used, meaning that cards with low markup (debit cards) and high markup (corporate cards) will essentially cost the same. This model can be convenient for businesses that don’t process a high volume of credit card transactions.Interchange plus pricingInterchange plus pricing works by adding a fixed markup to a card company’s interchange fees. Interchange plus pricing is made up of two components: The interchange fees charged by the card brand, and the plus refers to markup fees from your credit card processor that are applied to every credit card transaction.Why do credit card processing fees exist?Like any other service, credit card payment services need to be paid for their part in the process. With credit card processing, there are multiple players involved with every transaction such as the credit card processor, the credit card network (like Visa or MasterCard), and the issuing bank. 6 ways to lower your credit card processing feesIf you accept credit cards, you will have to deal with fees. However, there are strategies you can use to lower your credit card processing fees.1. Capture complete customer dataOn eCommerce and phone-based transactions, collecting complete data like billing address, phone number, and CVV code helps validate customers and reduce fraudulent transactions and chargebacks. Chargebacks can cost you $25 or more each time and increase the risk of nonpayment.Require complete information checks, including CVV checks and address verification, to reduce your risks. Tools like customer logins and saved payment methods also lower fraud rates. The more customer details you can gather, the lower your risk and transaction fees will be.2. Offer multiple payment optionsOffering multiple payment options is another way to lower your credit card processing fees, especially if you accept online payments. For example, ACH payments don’t incur interchange fees. Transfers happen between you and your bank and are governed by your agreement.Debit cards carry significantly less risk because the cash has to be in the account to use them. Debit cards typically have an interchange rate of $0.21 + $0.05 assessment. There may also be other options to manage costs, such as accepting payment from online processors, such as Google Pay, Apple Pay, or PayPal.Whether you use contactless payment solutions or embrace digital payment methods, you will need to do your research to find the optimal pricing structure.3. Pass credit card fees to customersAnother way to reduce your credit card processing fees is to introduce a dual-pricing program such as the Edge. The Edge is similar to the “gas station model”: if your customers pay with cash, they pay one price, and if they pay by credit card, they pay a different price. Essentially, you’ll be transferring credit card fees to customers, achieving the same outcome as a cash discount—while remaining fully compliant with credit card brand policies and legal regulations. The credit card terminal handles all the calculations for you, and you end up with the same amount in your bank account on all sales.4. Watch for fee increasesKeep an eye on your monthly statements. Card networks can increase interchange fees or assessments. Depending on the agreement with your credit card processor, the fees they charge can go up as well.While you can’t negotiate the interchange fees or assessments the banks and credit card networks charge, you may be able to negotiate the rate your payment processor charges. If you notice rates increase, it’s worth a call to your current provider to see if there’s anything you can do to lower your costs. You also have the option of switching to another provider that may be willing to discount fees to earn your business.If you decide to work with us, we’ll give you a Rate Sekurity Guarantee®. Since we’re not a credit card processor, our Payment Experts have the freedom and flexibility to make sure you’re getting the best possible deal every year.5. Make sure you are PCI DSS compliantPayment Card Industry Data Security Standard (PCI DSS) rules govern how credit card information is processed, stored, and transmitted. Processors typically give new merchants a short period to become compliant. If you do not comply, you will likely see an increased monthly fee due to the increased risk.Major card providers all require merchants to be PCI-compliant at varying levels depending on the annual transaction volume.6. Batch process transactionsCredit card processing fees may include a per-transaction charge. Over a day, these fees can add up, especially if you process a high volume of transactions. Batch processing can consolidate multiple transactions, allowing you to pay one processing fee for the entire batch rather than for each transaction. Batch processing also streamlines reconciliation because there are fewer transactions to manage.You will want to examine your payment processor’s fee structure. Most processors offer reduced rates for batch processors, but others may not. If your processor charges different fees for transaction volume, you will also want to evaluate whether daily or weekly batch processing is a more cost-efficient way of doing business.Lowering credit card processing fees with the right partnerThe right payment processing partner will do more than just handle transactions—they’ll help you reduce costs. By analyzing your monthly statements and applying proven strategies, you can significantly lower your fees.At Sekure, our Payment Experts work with you to find the most cost-effective pricing structure for your business. Through our Rate Sekurity Guarantee®, we continuously review your account to ensure you're always paying the lowest possible rates.Let’s talk about how we can help reduce your fees and maximize your savings.Contact Sekure today to get started.FAQs: Lowering processing fees

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