Merchant service fees – these are the charges you pay to receive payment via credit cards. These fees usually come out of your bottom line and eat into your profits. Thankfully, you can do a few things to minimize them and keep more money in your pocket.
To cut down on merchant service fees, you need to keep a close eye on how much it costs you to process credit cards.
5 Ways to Cut Down on Merchant Fees
In general, there are 5 different strategies to reduce payment processing fees:
1. Settle transactions within 24 hours.
Credit card companies charge a small fee for each day a transaction is pending in your account. The longer a customer’s payment sits in your account, the more costly it becomes in terms of fees. By settling transactions within 24 hours, you can reduce or eliminate this cost entirely.
2. Encourage customers to use debit.
If you accept debit cards, this strategy will save you money right off the bat – instead of paying a fee for each swiped transaction, you’ll get paid directly by the customer’s bank. Plus, the debit card interchange fees are lower than the charge on credit cards.
3. Avoid the Tiered Pricing Plan
Most credit card processors use a tiered pricing system to process transactions – and it works against merchants. Tiered pricing plans typically charge a higher per-transaction fee on transactions that fall in the highest tier, and a lower per-transaction fee on transactions that fall in the lowest tier. The good news is that you have the option to consider other pricing plans.
4. Do not lease/rent, buy payment equipment
It is always better to buy than lease, but it is even more important when dealing with merchant services companies. These service providers typically want you to lease the equipment they provide as a means of increasing their profitability.
5. Verify addresses with AVS
Some service providers will charge a lower interchange rate if you use an address verification system(AVS)
AVS is a service that verifies whether the cardholder’s billing address matches the information on file with the issuing bank. By verifying an address, you can protect yourself from fraud and ensure customers are paying the right bills.
Besides the above tips, the best way to reduce merchant service fees and save more money is to shop around. Pay attention to the fees and surcharges involved in merchant services and make sure they make financial sense for your business. Don’t hesitate to switch if necessary.
Author Bio:- Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of merchant account providers. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.