Merchant account fees are a substantial portion of monthly expenses for many businesses. Keeping processing expenses low is a very worthwile priority – here are 5 tips you can use to make sure your saving money on credit card processing for your business:
Periodically test the marketing to ensure you have competitive rates and fees. Merchant account providers can raise rates and fees over time. If you don’t test the market, you will fall out of touch with what competitive rates and fees are. To kep your rates and fees as low as possible, periodically get processing quotes from other service providers.
Stop leasing processing equipment. Credit card processing equipment is not nearly as expensive as it was even a few years ago. Leasing made sense when processing equipment was cost-prohibitive to own. These days equimpment can be purchased for a few hundred dollars, and some providers even offer a free machine with a new merchant account. If you’re currently locked into a leasing contract, research how much it will cost to end the agreement. If you have to buy out the remainder of the lease, it may not be worth it to cancel. However, if your lease has a cancellation fee it may be less expensive to cancel the lease and purchase a terminal.
Negotiate your monthly minimum fee. A monthly minimum fee is the minimum amount of processing charges that a merchant must pay their provider in a monthly period. In any month where processing fees don’t equal the minimum, the merchant will have to pay the difference out of pocket. Businesses that have a substantial and consistent monthly processing volume won’t be affected by a monthly minimum as much as businesses that process seasonally or that don’t process a high volume. If you’re paying monthly minimums on a fairly regular basis, call your provider and ask to have the fees reduced or waived. If they decline to work with you, find another provider that doesn’t charge a minimum.
Get two merchant accounts if you process card-present and card-not-present transactions. Card-present businesses that process even a small amount of not-present transactions can reduce processing fees by getting another merchant account. When you’re trying to save money, the suggestion to open another account may sound counterproductive – but the devil is in the details. When a not-present transaction is processed through a card-present merchant account, the transaction downgrades to a higher processing rate. By opening a separate card-not-present merchant account to process not-present transactions, you’ll avoid excessive downgrades and save on fees. Also, providers are usually willing to waive or lower merchant account statement and minimum fees on a second processing account.
Figure out why transactions are downgrading and take action. A credit card transaction downgrades when it is assessed a surcharge called a mid or non-qualified fee. Knowing how many of your transactions downgrade is vital to saving money on credit card processing. Study your monthly processing statements each month to figure out how many of your transactions are downgrading. If you’re unable to read your statement, call your provider and ask that they go through and explain the charges. Once you assess how many of your transactions are downgrading, call your provider and ask them to explain the reason for the downgrades. Depending on the reason, it may be possible for your provider to make changes to your account to limit downgrading. Changing your processing habits may also help minimize downgrades. When you’re processing credit cards, make sure to follow Visa and MasterCard guidelines for qualifying transactions. For example, always obtain a signature for card present transactions and take care to obtain an AVS match for card-not-present transactions. When you contact your provider to ask why transactions are downgrading, they should be able to diagnose bad processing habits by looking at downgrades on your statement. Be sure to ask for their suggestion on how you can change your procedures to minimize downgrades.
Article Source: MerchantCouncil.org