Avoiding Merchant Credit Card Processing Fees


If you are a merchant or own a business, then you know firsthand about credit card processing fees. While customers may not see that the business they are in is charged for the payments that they accept, you know very well that merchant credit card processing fees are not insignificant. While 3-5% doesn’t sound like a lot, it very much adds up and over time, it can have a heavy impact on profitability and margin. If you want to increase your margin and gain more control over how much you pay to accept payments, then there are definitely ways that you can do so. The savvy merchant works with their processor to find out how they can reduce credit card processing fees, gain more margin, and achieve a competitive advantage over their regional, national, and global industry rivals.

What are merchant credit card processing fees?

Though many merchants are already familiar with what exactly credit card fees are, it is helpful in the context of the conversation to go over what exactly you are paying for when you pay credit card processing fees and how they impact your business. Almost every merchant out there has a need to accept credit cards as payment. This is something that is typically unavoidable from a big-picture perspective.

When a business accepts credit cards as payment, there is a cost associated. The merchant must use a merchant services or credit card processing company that specializes in helping businesses accept payments so that they can cater to their customers that want to pay with digital means. This service isn’t free. Credit card processing fees are the cost associated with accepting a credit card payment from a customer. This typically ranges in percentage, but is most often between 3-5% of each transaction.

What is the downside to paying credit card processing fees?

There’s no doubt that paying credit card fees is an unavoidable occurrence that must happen at any given point when accepting payments. A credit card processor does provide a lot of value for a business and enables the business to accept payments, which is an essential part of what they do. However, there are some negatives that come along with having to pay credit card fees. Here are just some of the reasons that many merchants look to decrease the amount in credit card fees that they pay and why so many merchants are harmed by credit card fees as a whole.

Customer Relationship

When you have to pay credit card processing fees on each payment that you accept, it leads to you having to increase prices across the board to make up for that fee. Just to keep up with what you consider to be an acceptable margin, you may have to increase your prices several times to adjust for inflation and fee increases. As a result, this can easily cause the customer-business relationship to fracture and become damaged. If you want to preserve your relationship with your customers and continue to have a positive relationship with them, then you undoubtedly want to find a way to avoid credit card processing fees.

Lower Margin

Another side effect of paying more credit card processing fees is that your margin for your products will be lower. For those that operate on a low margin already, this can alter the course of a business altogether. Credit card processing fees are no longer a negligible line item. If you want to be competitive in your industry and match the prices of others, you need to explore every avenue possible that could lead to a lower amount of your transactions paid in credit card processing fees. With a lower margin, your business will be less likely to thrive and be price competitive, especially in industries that already have a low margin on their products and services.

Lower Cash Flow

In business, cash flow is everything. Cash flow is what enables you to pursue opportunities, invest in your business, and maintain a healthy balance in your business bank account. In short, if you want to have a successful business, then you need a healthy cash flow. When you are paying 3-5% of your transactions in credit card processing fees, this can lower your cash flow and harm your ability to pursue the investments and opportunities that you need to improve your business and move it forward.

Can you avoid credit card processing fees?

One of the first questions that many business owners have is whether it is possible to avoid credit card fees when you own a business. For the most part, you will need to pay credit card processing fees in one way or another regardless of what business you are in. For small businesses that accept only cash, this is not as much of a problem. While there are steps that you can take to certainly lower the amount of credit card processing fees that you will owe, you will have a very difficult time cutting them out of your business altogether. However, there are strategies that you, as a business owner, can use to reduce your own liability for these fees and pass them on to the party that is gaining all of the convenience by paying with a credit card.

How to lower credit card processing fees

Though there is not usually a good way to avoid fees altogether, there are strategies that you can use to lower the amount of fees that you pay when you process payments. One of the best ways to do this is to work with an agent to participate in our merchant cash discount program, which incentivizes customers to pay with cash in exchange for a discount that saves both the merchant and the customer money. Without this fee, you can enjoy your margin and your customer will be happier with a lower price. For customers that do want the convenience of a digital payment, no problem! Simply add a small surcharge to cover the cost of the fee and you will be mitigating a lot of the negative effects that credit card fees can have on your business and cash flow.

How to get started

If a merchant cash discount program sounds right to you, then all you need to do is get in touch with a merchant cash discount program agent to help you take advantage of this program and start saving money on your payment processing today.

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