How To Reduce Your Credit Card Processing Fees

Understanding the hidden costs involved with processing debit or credit card transactions may seem overwhelming. The key to avoiding excessive fees is to find opportunities to optimize your card acceptance process. 

Types of Credit Card Processing Fees

Each time your clients pay you via card, there will be a processing fee. Some card providers also charge account fees and other types of fees as well. These fees contribute to your total costs each time your business accepts a card.  

Keeping track of all of the different types of fees associated with accepting credit cards may be cumbersome. However, it’s essential to be aware of the rate your business has to fork over for each kind of transaction. Rates are usually compiled of the following fees: 

Interchange Fees

Credit card networks set interchange rates, which are the fees your processor pays to the card users issuing bank. These fees help offset each credit card transaction’s inherent risk of being paid back, fraud, and the expenses incurred while handling the transactions. 

Interchange fees are the most significant portion of the extra costs. Your processor will, in turn, pass this charge over to you with your rate. These fees will vary depending on your industry, the type of card being used, the method it’s accepted, and the total amount of the sale. 

Interchange rates are set by the card networks, which make them non-negotiable. However, companies have had success lowering their interchange fees by providing additional data when submitting transactions. 

Assessment Fees 

Credit card companies issue assessment fees to individuals and businesses choosing to use their brand. These fees pay for the processing cost made on the card provider’s network. Assessment fees are lower than interchange fees but are not open for negotiations.  

Processing Markup Fees

Credit card processors make their profits by marking up their processing fees. These fees also help to cover the companies operating expenses. However, this part of the rate is negotiable, and that’s why it’s essential to work with an Interchange Pro with experience getting the best rates for their clients. 

Some of the following fees happen incidentally when specific actions are taken. Account service fees can be ongoing fees that the processor charges to maintain your account, and you may be able to negotiate some of these. Here are some examples:

AVS Fee

Address verification service (AVS) is a system that authenticates the cardholder’s address with the credit card issuer. AVS is a popular tool for fighting fraudulent purchases and provides major benefits for those using card-not-present transactions.

Although the AVS fees are very minimal, these costs protect your business from fraud by verifying the cardholder’s address details each time a transaction is made with your business. Visa and Mastercard both offer AVS support internationally. 

Visa encourages businesses to use AVS by providing lower interchange rates when you perform an AVS check on transactions in the US. AVS can protect your business from fraud and help your business to reduce its credit card processing fees. 

Batch Fees

Batch fees are the smaller daily fees that cover the costs of your daily deposits. 

Chargeback Fee

When you have a client or customer that disputes a transaction, the processor will charge your business a fee. Some payment processors offer refunds to those who win this dispute. It can be beneficial to your business to negotiate these terms to hold on to your business’s valuable resources. 

Payment Gateway Fee

Payment gateways help businesses to accept payments online. These payment gateways also charge a fee for the usage of their gateways. Interchange Pros can help your business choose the appropriate gateway that meets your needs and budget. 

Monthly Fees

Each month payment processors issue a monthly statement or service fee to help cover their monthly support services. These services include the preparation of your monthly bill statement and customer service costs. 

Some service providers require you to process a certain amount of transactions every month or generate a certain dollar amount in fees.  These companies charge you a fee if you don’t meet that minimum.

PCI Compliance Fee 

The Payment Card Industry Data Security Standard (PCI DSS) is a set of conditions designed to assure that companies process, store, or transmit credit card information in a secure manner.

Processors require you to fill out an annual questionnaire to confirm that your business complies with all of the data security standards.  Some processors may be willing to waive these fees for you.

PCI Non-Compliance Fee 

When your business fails to maintain your compliance with the PCI DSS, then your business will be charged this fee every month until your business returns to compliance. Your business can save money by making sure your merchant account remains in compliance. 

Voice Authorization Fee

Voice authorization is used as an anti-fraud tool that prompts you to call the credit card company and give them more information before a transaction is approved or declined. Though this happens infrequently, when it does happen your business will be charged a fee.

Credit Card Processing Professionals

It’s to the advantage of business owners to work with an interchange professional because most business owners don’t understand how processing fees are costing them money. Interchange Pros can assist you in gaining a more thorough understanding of these fees. 

Not only can Interchange Pros debunk the mythical nature of credit processing, but their experience and relationship with processors can also help you get lower rates for your business.