Merchant account fees can easily pile up and make a dent in your profits. While these fees are part of the service that you are paying for, they should not have any negative impact on your business. Fortunately, there are a number of steps that you can take which will help you keep your fees low on your merchant account.
There are a lot of merchant account providers that offer an introductory credit card rate when you open a new merchant account with them. The problem with this is that there are a lot of providers that use this offer to trap you in a long-term contract where they raise the fees every year after the introductory offer. Being aware of this and avoiding any too good to be true offers is the first step you should take to keep your merchant account fees low.
When you look at introductory offers, you should also look at how you are going to be charged. This is just as important as the rate. Rates are generally negotiable, but the rate platform the provider users could result in you paying more than you were promised.
Understanding a bit about how the whole merchant account system works will come in handy when you want to lower the fees you pay. Interchange is the basis for the processing costs that you face, but you need to know what this is. The interchange is the rate which is set by Discover, Visa, and MasterCard for you accepting payments from their cards. These rates are completely non-negotiable.
Interchange plus pricing is slightly different and will refer to the costs you face from the merchant account provider. This type of pricing will have you paying the interchange fees plus a fixed markup. This fee model will always end up being less expensive than the bundled or tiered pricing models that are generally offered. They will also be more transparent which is something that you need to consider.
The interchange plus pricing model is more transparent because different fees will be changed depending on the interchange category they fall into. Each type of card payment that you can process will have their own interchange costs which make it easier to see what is happening on your account. You will also be able to see the true costs of your processing and not have to worry about any nasty surprises.
Another way to lower your processing fees will be to understand any bogus fees that you might be paying. One of the most common bogus fees that businesses are paying is the monthly minimum fee. These will be charged by the merchant account provider when you do not hit a set monthly amount in terms of card processing. Any principled provider will not charge these fees and you should not be paying them.
Another bogus fee that you can eliminate to lower your costs is the leasing fee for your machines and terminals. Leasing terminals from your provider is one of the most wasteful decisions you can make in terms of credit card processing. You will generally be able to buy a terminal for the same cost as the first few months of your lease. However, leasing contracts will generally lock you in for 3 to 4 years which means you are paying a lot more than you should. Know How To Apply For A Merchant Account For Your Business
When leasing, you will also generally have to return the terminal to the provider at the end of the lease. Buying your terminal outright will be better in the long-term and will cost you less. You will also be able to update your equipment when you need to which is something that you do not get with a lease. Also look at Merchant Account Benefits .
Another way that you can lower your processing fees is to accept alternative payment methods. If you cannot accept anything other than cards, you should look at encouraging the use of debit cards instead of credit cards. This will help you because debit cards have a lower processing fee than credit cards. This will be very helpful if you are on the interchange plus pricing model. If you are on this model, you can also look at the other cards that will have lower fees and encourage their use.Read about the best reviewed high risk merchant solutions .