Are You Paying Too Much For Merchant Services?

Monday, December 6th, 2021

Merchant service fees can include a multitude of charges. They’re a necessary annoyance in the realm of credit card processing, but that doesn’t necessarily mean you have to pay more than you have to. Read on to find out how you can minimize them.

Understanding Merchant Service Fees

Merchant Service Fees are those that credit card processors charge you for each and every transaction that you process. 

These fees are usually listed as a percentage of your sales or a fixed amount per transaction. Merchant service fees can range from as little as 1% or less of the total transaction to as high as 4% or more of the total transaction.

You might also see these fees referred to as interchange fees, interchange rates, or swipe fees.

5 Ways to Reduce Merchant Service Fees

To help you get the right rate and save on fees, here are a few tips for selecting a merchant service provider:

1. Settle payments in 24 hours

Service providers usually offer you a better interchange rate if you settle transactions within 24 hours. Instead of waiting until the end of a month or a billing cycle before processing everything, payout as soon as possible. This way, processors have less of a chance to bill you for underbilling.

2. Consider more affordable payment options like debit. 

Debit cards have lower transaction fees than credit cards do. If customers’ primary payment method is going to be debit anyway, it might make sense to set them up with an option to pay by debit card. You’ll give customers an option they prefer while also saving yourself on fees.

3. Keep off long contracts

Deals from processors come with strings attached. Don’t get caught in a long-term contract with a merchant service provider that offers an attractive introductory rate only to introduce hidden charges down the road.

4. Streamline your transactions

Eliminate errors in your transactions and solve customer concerns before they turn into chargebacks. More errors mean more problems and this can add up to significant losses.

5. Buy payment equipment, do not rent!

The single biggest thing you can do to reduce your merchant account fees is to buy equipment rather than rent or lease it. This may sound counter-intuitive because the equipment costs money upfront, but it pays off big time when you compare what renting would cost over the long term. 

In the end, 

Credit card processing is a must-do, and it’s a cost that many of us have to face. Still, you can use the above tips and tricks to reduce spending on merchant service fees.