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7 Strategies to Reduce Your Credit Card Processing Fees
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More and more customers now want to pay by credit cards because they’re the most convenient mode of payment. Credit cards definitely have an upper hand over cash or debit cards as the customers prefer walking into stores or landing at those merchant websites that accept credit cards without any hassle. Most retailers that welcome credit card payments need to pay a ‘payment processing fee’ for each transaction.
The credit card processing fee is a small proportion of the original purchase value and is levied on the merchant by the bank. If you look at it singularly, the amount may seem small, but if you have a large business and have a pile of credit card payments happening every day at your store, the amount adds up to a substantial figure. This article will educate you on the strategies to reduce your credit card processing fee:
Factors Determining Credit Card Processing Fee
The credit card processing fee depends on various factors:
How to Reduce Credit Card Processing Fee?
1. Select a Right Pricing Model
When you are discussing the pricing plans with your payment processors, make sure you’re offered the right pricing model. Usually, the pricing plan offered to any business is based on the business type, the volume of transactions, business growth, and business risk type. Take your pick wisely and don’t hesitate to ask for a negotiated pricing plan from your payment processor.
2. Negotiate the Markup Free
While it is a bit challenging to negotiate interchange and assessment fees, you can certainly negotiate the markup fee determined by the merchant account provider. The way this world works is – a higher volume of transactions attracts lower fees and vice versa. If you’re able to establish yourself as a high-value business with a large volume of transactions done every day, you can get yourself a good deal on a markup fee.
The best way to approach the subject is by assuring and demonstrating increased sales in the coming years and a proven plan to demonstrate your annual business growth. You might even receive a discount if your volume is large enough for the payment processors to negotiate the terms with suppliers.
3. Demonstrate Credit Card Safety Norms
A tiny part of the processing fee goes towards the payment processor and the issuing banks to safeguard against the risks associated with credit card transactions. If you’re categorized as a high-risk business, you’re more likely to be levied a higher credit card processing fee. While, on the other side, if you are able to demonstrate and assure the bank that your business carries the least risk and fraudulent activities, they’ll be willing to extend you a lower credit card processing fee.
Your negotiation proposal should exhibit:
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4. Have an Address Verification Service in Place
Address Verification Service (AVS) is a solid system to reduce the probability of credit card frauds and risks. This service simply validates the cardholder’s billing address with that in the issuing bank’s records to ensure that the credit card transaction is done by the authorised cardholder or someone in the family. This system adds yet another safety layer to the credit card payment processing process and eliminates any risk of credit card identity theft or fraud. This assures the banks and payment processors to trust the business explicitly and offer lower credit card processing fees.
Use the above-mentioned credit card processing fee reduction tips and see them sliding down. Also, keep checking back your processing fee payment analytics year after year to know the pattern. Once the payment systems are set up, businesses might take it for granted as everything runs like an auto-play cassette. Having said that, it doesn’t hurt to have a closer look at the credit card processing fee, more so when you’re on your way to business expansion and need every bit of savings for the purpose. This is indeed a positive move in the right direction towards valuable business growth.
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