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5 Top Tips to Reduce Merchant Fees
There are certain proven methods which
help in lowering the expenses by
reducing the merchant fees and saving
money. Following are a few tips which go
a long way in reducing the processing
fees for merchant accounts:
Shopping around for merchant accounts –
A number of firms make false promises to
merchants about reducing the costs. It
is only be realised later by the
merchant that the rates are far higher
than what was promised. It is always a
good idea to shop for rates at reputed
companies. Also, the white and black of
what is being overcharged should be
mentioned. By following this, the rates
which are more than what was promised
can be blacked out legally from the
contract and another processor can be
opted for. If a dealer is opening a
merchant account for the first time, it
is advisable to obtain quoted from
various merchant account providers. The
information obtained from each and every
processor should be used for quoting the
next merchant account processor. The
more knowledge a merchant gains, the
lower the charge will become.
Have a look at “Interchange Plus
Pricing” – interchange refers to the
minimum fee which is paid to MasterCard
and Visa. Interchange plus pricing is
usually reserved for outsized merchants
but it is also offered to smaller
traders as well. this will lower the
rates drastically but depends on the
type of industry and the manner in which
the credit cards are accepted. However,
it is not applicable to all traders and
sometimes the tiered accounts are a
better option for smaller traders.
It is best to get better tier pricing
from another processor – The merchant
account pricing is made up of components
as follows:
-
Discount Rate – this is the fraction
rate for non-qualified, mid-qualified
and qualified tiers. The non-qualified
and mid-qualified tiers are known as the
downgrades and depend on the type of
card as will as the swipe transaction
processing. The qualified rate is the
lowest.
-
Transaction Fee – a transaction fee is
charged if a transaction or
authorization is processed, either by
internet or phone of swipe or keyed in
transaction. Based on the ticket size
average, the transaction fee has a huge
impact on the business. If the ticket
average is small, the transaction fee
could be a huge fraction of the fee. The
higher the amount for transaction sales,
the lesser the transaction fee affects
the total fee.
-
Statement Fee – This fee has to be paid
on a monthly basis. A few processors
take a big sum for this service. As this
fee remains fixed every month, it is
best to try and reduce this fee.
Try reducing the minimum processing fee
– The processing fee is applicable if
the sales are not being processed at the
end of every month or if there is a
small volume of sales each month.
Try avoiding service plans on monthly
basis – A few processors try pushing
such plans on merchants. These fees on
monthly basis are not recommended.
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