Are You Paying Too Much for Merchant Services Credit Card Processing Fees?
As a business owner, you know that accepting credit card payments is a must. However, it’s important to understand that with every transaction, there are fees attached. These fees are known as merchant services credit card processing fees, and they can add up quickly. It’s vital to be aware of what you’re paying and why.
Here are six things you should know about merchant services credit card processing fees:
1. The three main types of fees
There are three types of fees that businesses typically pay to accept credit card payments: interchange fees, processor fees, and assessment fees.
Interchange fees are paid to the card-issuing bank and are determined by the type of card used and the transaction amount. Processor fees are charged by the payment processor, the company that processes the payment. Assessment fees are charged by the card brands, such as Visa or Mastercard.
2. The fees vary by card type
Different types of cards come with different interchange fees. For example, rewards cards typically have higher interchange fees than non-rewards cards. Debit cards usually have lower interchange fees than credit cards. By understanding these differences, you can tailor your payment options to minimize costs.
3. You can negotiate rates with your processor
Many business owners believe that the fees associated with credit card processing are fixed and non-negotiable. However, you have the power to negotiate rates with your payment processor. Shop around and compare fees from different providers, and don’t be afraid to negotiate for a better deal.
4. New technology can help lower costs
New payment technologies, such as contactless payments and mobile wallets, can help reduce your merchant services credit card processing fees. These options typically have lower interchange fees than traditional credit cards. Additionally, accepting payments through digital wallets like Apple Pay or Google Wallet can be cheaper than processing credit card payments.
5. You can take steps to minimize chargebacks
Chargebacks occur when a customer disputes a transaction and demands a refund. Chargebacks can be costly, as businesses may be liable for the cost of the transaction and additional fees. However, there are steps you can take to minimize the likelihood of chargebacks. Clear and accurate product descriptions, prompt customer service, and quick refunds can help mitigate chargeback risk.
6. Non-compliance can lead to additional fees
Payment processors and card brands have strict regulations and standards that merchants must comply with. Failure to comply with these standards can result in additional fees. For example, if your business doesn’t maintain proper security measures for credit card data, you may be hit with non-compliance fees. It’s important to stay up-to-date on these regulations and ensure that your business is in compliance.
In conclusion, understanding merchant services credit card processing fees is essential for any business that accepts credit card payments. By knowing the different types of fees, negotiating with your payment processor, adopting new payment technologies, minimizing chargebacks, and staying in compliance, you can save your business money and make the most of your payment options. So take the time to review your payment processes and make any necessary changes to keep your fees under control.