There are several strategies to lower processing fees when taking credit card payments over the phone. In a small business, credit card processing fees may not seem like a huge costly concern. However, as a finance professional, you know those percentages that processors take on every transaction can add up quickly over time. When you combine transaction fees with assessment, authorization, and other monthly costs, credit card processing bills can soar. Unfortunately, these costs are unavoidable. Nevertheless, there are many ways to reduce your company’s expenses. Read on to discover several strategies you can implement in your small business to lower processing fees when taking credit card payments.
Choose an Economical Pricing Structure
One way to reduce credit card processing costs is to choose the most economical pricing structure for your small business. There are a few different pricing structures to be aware of before selecting a credit card processor. For example, a flat fee pricing structure charges a standalone percentage fee (such as 2.75%) on all transactions. It typically includes the issuing bank’s fee, the provider’s assessment fee, payment processing fee, and the merchant’s bank fee. On the other hand, the interchange plus model charges a percentage. There is an additional dollar amount charge per transaction that goes to the processor. The interchange rate is usually a lower. Tiered models have varying costs based on the type of transaction. When choosing a fee structure, you should know your customers’ payment behaviors. If they use business credit cards, a flat fee may be less expensive. Choosing an economical pricing structure is vital to reduce credit card processing fees in your small business.
Negotiate Processing Fees
Another way to lower your business’s credit card bills is by negotiating processing fees. Negotiation can be an effective strategy to save money whether you are signing up for a credit card processor or reviewing an existing relationship. However, it might not always be easy. As a finance professional, you should review your transactions once a year. Be sure that they are categorized properly at the lowest possible cost. If your business is growing, you are likely gaining value to your credit card processor. This can give you room to negotiate. Many processors are willing to negotiate fees because they know they will make up the money by having loyal customers for an extended period of time. Furthermore, studies show that of the 25% of business who have tried negotiation, there has been an 80% success rate at achieving lower processing fees. This illustrates that negotiating credit card processing fees can be an effective strategy to maximize profits for your small business.
Set a Policy Minimum for Credit Consumers
You need to set a policy minimum in order to appropriately navigate merchant credit card fees. Moreover, setting a minimum for credit card consumers is another way to ensure that you are saving as much money as possible in your transactions. Many merchants set a firm minimum as per their company policy for when they accept credit card payment. For instance, a common amount is about $10. This is because customers either turn to cash or simply spend more. Extra revenue can help offset credit card fees. Cash sidesteps the fee altogether. Therefore, both of these options benefit your business’s earnings. All you would have to do to implement the change is post the rule at the point of sale. Setting a policy minimum for credit consumers is another effective solution to lower your company’s credit card processing expenses.
Swipe, Don’t Punch
Another strategy your business can implement to save on credit card processing fees is simply being sure to swipe or insert the card, rather than punching in the account number. Data shows that when merchants manually enter the credit card information, they are charged a higher fee on the transaction. This is because manual entries are more vulnerable to fraud and identity theft. This may seem like a simple, efficient method that your employees are already using. However, credit card transactions over the phone are especially higher risk. Thus, to maximize your business’s profits, make sure employees swipe or insert the customer’s credit card whenever possible.
Settle Transactions Timely
Furthermore, settling can transactions in a timely manner can also help your business save on credit card processing fees. It is common for many small businesses to complete the credit settlement at the end of the day. With that being said, after a long shift it is easy to put it off until the next day. Typically, your business can get the best interchange rate if employees settle the credit transactions within 24 hours. Settling transactions timely can help your business improve it financial status with your credit processors.
There are several effective strategies your small business can implement to save money when taking credit card payments. One way is to choose an economical pricing structure that is ideal for your business. In addition, negotiating processing fees can be a powerful way to reduce your credit card processing rates. Setting a policy minimum for consumers can also improve your profit margins. Make sure that employees swipe or insert credit cards whenever possible to achieve lower payments per transaction. Finally, settle credit card transactions within 24 hours to keep payments as low as possible. Consider these strategies to lower processing fees when taking credit card payments.