Many business owners consider online payment processing fees small enough to be negligible. This couldn’t be further from the truth.
For starters, as minor as your transaction fees may be, they do add up. And when you combine them with monthly fees, assessment fees, and authorization costs, your processing costs will only rack up.
Though you can’t avoid these expenses, you can make an effort to reduce them. Here are five ways to lower credit card processing costs.
Table of Contents
Reduce the Risk of Fraud
Your credit card processing fees have a direct correlation to the security risk you pose. The best way to reduce that risk is to swipe as many cards as you can. Both Visa and MasterCard set higher rates for keyed-in cards based on fraud risk.
Another way to reduce fraud is to provide relevant security information. This includes entering the security code and the billing ZIP code. This may seem like a nuisance, but it validates the purchase and protects the cardholder.
Use an Address Verification Service
An address verification service (AVS) is a valuable tool for limiting fraud and chargebacks. Visa provides lower interchange rates for transactions where the merchant performs an AVS check. MasterCard supports AVS as well.
The way this works is that a customer enters their billing address during checkout. The system compares this address to the address on file with their bank. The bank sends an AVS code to the merchant who can use it to accept or reject the transaction.
Have an Efficient Setup
Do you make a habit of processing your business transactions within 24 hours? If you don’t, start doing it, as it reduces your processing fees. The longer you wait with processing your transactions, the higher your rates will be.
Setting up your account can also impact the fee structure. By setting it up improperly, you’re more likely to incur higher processing fees. Make sure to give the correct information for transaction type and transaction frequency.
Negotiate a Better Deal
Do your best to make your payment processor see you as a merchant that adds value. This makes them more likely to want your business, which makes them more open to negotiation. If it’s worthwhile for them, they won’t mind lowering the rates.
One path to low credit card processing fees is leveraging your transaction volume. The more transactions you process, the more value you add to your processor.
Consult With an Expert
Did you know all processors buy their rates from Visa, MasterCard, and Discover for the same price? That’s true regardless of their size or transaction volume. This gives them a great opportunity to resell these rates to different businesses.
Knowing insider information like that gives you an edge with vendors. This is why consulting with an expert in online payment processing tends to be worth your time.
More on Online Payment Processing
As you can see, cheap online payment processing is far from a pipe dream. If you use AVS, set up your terminal the right way, and accept cards in-person as much as you can, you’re already halfway there.
Want to know more about the nitty-gritty of online payment processing? Keep checking out our business section!
