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.