How to Save Transaction Fees for Your Business

Of all the expenses businesses that have to rely on card payments put up with, transaction fees are among the highest. The charges by the payment processor, credit card companies, and banks start mounting up and nibbling at the profit margins-especially for small businesses. While one can’t avoid paying for the convenience of electronic payments, there are quite a number of ways to help cut costs for a business. If you understand how payment processing fees work, you can take proactive steps to control them-meaning that you can save money and improve your bottom line. Following are some intelligent strategies to reduce the cost of payment processing.

Negotiate with Your Payment Processor

What many businesses do not realize is that many of these charges can be negotiated. Interchange and assessment are non-negotiable fees, but you can sometimes discuss a processor markup. If you run a high-volume business, you are in an even stronger position to negotiate better rates with your payment processor.

It is advisable to compare-shop and obtain estimates from several processors before signing up for a multiple-year contract. Even if you happen to be in such a situation already, it will not hurt to ask your processor for better terms, especially if you have been with them for quite some time and have a good record. Many processors will do their best to lower their rates rather than lose you as a customer.

Encourage the Use of Low-Cost Payment Methods

The type of payment card your customer uses can greatly affect your processing fees. Rewards cards, corporate cards, and premium credit cards have interchange fees much higher than standard debit cards. Allowing the customers to use a debit card or other low-cost methods of payment will help in cutting down the cost of transactions.

You can incentivize your customers to make payments using available options by offering discounts or incentives to the use of debit cards or ACH payments. Such may include giving a small discount for paying by debit card instead of by credit card for switching more customers to lower-fee options. Just make sure you are following any local laws or regulations regarding surcharging or offering discounts for the method of payment.

Use Overseas Payment Processors

With continuous growth in global commerce, every business should consider the acceptance of alternative modes of payments, particularly to accept WeChat Pay since such a business interacts with customers from all over the world. WeChat Pay is one of the most popular mobile payment options of China and finds its place at an increasing rate among businesses around the globe. Adding WeChat Pay to your choices for receiving payments will surely increase the scale of targeting customers, especially those who are tourists or clients from abroad, without being involved in the very high transaction fees that traditionally surround credit card processing.

Reduce Chargebacks and Fraud

In addition to the administrative time spent resolving disputes, chargebacks and fraudulent transactions will cost you even more in fees. Less fraud and reduced chargebacks mean avoiding unnecessary costs and keeping overall processing fees lower.

Because fraud-avoidance tools, such as AVS and CVV, may be able to prevent scams from happening at all. A clear checkout flow has the potential to lower chargebacks caused by customer confusion or dissatisfaction. Its reaction to customer inquiries on time, or issue resolution prior to relying on chargebacks, can save it money long-term.

Consider Passing Fees to Customers

Others create a consumer surcharge or convenience fee to process the payment. This permits some of the cost in card processing to be deflected, but it is a fragile balance executed along with local laws and credit card network rules. In some areas, making surcharges added is considered illegal, although other areas may permit the addition of surcharges only if the consumer has been fully disclosed.

If you’re going to pass fees onto the consumer, make sure that customer knows at checkout to avoid poor customer experiences. You may also want to consider alternative options, like cash discounts, that could incentivize your customers to pay by methods lower in cost to you-all while being very transparent.

Conclusion

Large reductions in transaction fees can greatly impact the profitability of a business. Payment processing costs continue to rise. By being proactive and taking responsibility for your fees, negotiating with your processor, selecting the correct pricing model, and incentivizing payment methods that cost less, you will have more control over your cost of payment processing. You may even be able to reduce chargebacks and fraud, plus explore options to pass fees on to customers to further slash your costs. The result will be freeing up more money to reinvest in your business and help your bottom line.