Accepting credit cards in your business opens the door to a much larger potential customer base of consumers or businesses that prefer to use this payment method over others. While this is a huge benefit, perhaps the biggest problem is that credit card processing can come with a significant amount of fees that eat away at your revenue stream. However, these credit card fees don’t have to add business costs to your bottom line.
Instead, consider these 10 ways you can accept credit cards and actually reduce your overall business costs:
1. Shop around.
We know that certain aspects of credit cards are dictated by credit card associations and the issuing bank. This includes the wholesale transaction rate, which doesn’t change from one company to another. However, other fees that are tacked on do vary among credit card processors. This means it’s critical that you shop around and compare the different fees charged. While one credit card processor may say they have a lower rate, there could be some hidden fees or other issues that don’t make them the best choice. Only taking the time to research every aspect of the credit card processor will help you save the most money.
You can also check with the Better Business Bureau and visit the many review sites now established for credit card processing companies to make sure you not only get the best rates, but you also guarantee solid service and support. Here are a few good resources to help you find the top merchant processing companies.
2. Know what fees are not necessary.
Be on the lookout for unnecessary fees that are simply there to pad the profits of these credit card companies and simply end up raising your business costs. Stay away from signing contracts that then lead to cancellation fees. You also do not need to pay for PCI compliant fees, service fees, application fees, sign-up fees or statement fees.
3. Negotiate with processing companies.
Credit card processing companies will negotiates rates and fees with you, including the lower fee per transaction. When you know that many of these fees are unnecessary, it can be the place to start your negotiations to see what they may waive or reduce for you. If they really want your business, then maybe they will listen to your haggling.
4. Regularly review other processors.
Credit card processors change their rates each year so what might have worked for you last year may now end up costing you more than another processor that offers comparable service. Don’t become complacent with the processing company you use because this often ends up costing you way more than you should be paying. Other companies are emerging that offer a higher value service option. For example, if you are a restaurant, a company like Upserve provides low-cost payment processing options along with the technology to personalize customer experiences and create a more efficient restaurant operation. In this way, you could receive multiple benefits from working with a company that only offered payment processing to one that delivered multiple solutions for your business
5. Swipe (or insert) instead of manually enter.
There are higher fees on any transaction in which you have to manually enter the cardholder’s information versus swiping it. Another issue is that your risk for fraud goes up with manually entered transactions, which could further adversely impact your business costs. The new chip readers and magnetic strips have more security features that will help you keep costs down by fighting fraud and providing you with the lower transaction rate.
6. Require minimum credit card amounts.
By making it clear that you only accept credit card transactions that must have a minimum of $10 or $20, you are improving your margin on each transaction versus having to give a significant portion of the small sale away to fees. This can encourage your customers to use cash in your store or potentially increase their impulse buying to make sure they buy enough to meet your credit card processing transaction minimum amount. Either way, it’s a win for you.
7. Track your processing statements.
It’s important to read your processing statement each month. While it may appear the same for months on end, some credit card processing companies may suddenly raise rates or change their terms. If you are not watching this on your statement you could be raising your business costs unnecessarily. By keeping an eye on each statement, you can immediately address any increases by contacting your current processor to negotiate the fees down to where they were or start shopping around for a new processing company.
8. Raise your volume.
One of the best ways to save money on credit card processing is to expand your customer base, which provides you with a higher volume of credit card transactions each month. Typically, the fee per transaction goes down significantly as your volume goes up.
9. Focus on strategies that reduce chargebacks.
Chargebacks can end up costing your business a lot of money in fees and penalties as well as sometimes return the entire charge amount back to the customer. While some are legitimate, many chargebacks are driven by fraudulent activity that you can proactively limit among your transaction volume.
Look for a payment provider who can give you more anti-fraud tools; keep your product or service descriptions updated to ensure customers know what they are buying; offer the fastest shipping possible; make your refund policy very clear; and use a recognizable descriptor like a store name and contact information so that will show up on your customer’s credit card statement. It also is a good method to know your customer a bit better.
10. Don’t lease equipment.
Buying your credit card terminal is typically much better on your business costs than leasing it. You should be able to save considerable money over time and also most likely depreciate that equipment over time on your taxes. The growing availability of new mobile credit card readers also is helping to bring down the price of this processing equipment and providing even more rationale for a purchase versus lease strategy.
Stay vigilant and informed throughout all your credit card processing activity so that you can stop any unnecessary costs while continuing to increase the financial advantages of accepting credit cards.