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WAYS TO DECREASE YOUR REPLICA PAYMENT PROCESSING FEES

At first sight the fees for payment processing will seem to be reasonable. However, several small to medium sized and start up merchants were overwhelmed by the amount of fees they were charged when they received their monthly statement. A sale which was initially profitable becomes much less profitable after paying all the fees that were applicable for credit card processing. The several types of fees that are applicable are statement fees, batch fees, authorization fees and discount rates, among others. These can add up to become a substantial amount at the end of every month, eating in to the profits of your business.

Although, these small business owners don’t have many options and the leverage to negotiate a lower fee with the merchant account provider, they should understand how and why they are getting charged with all those fees’. This will at least help them to reduce the fees if not eliminate it. This article will explain about various fees’ that are applicable to a merchant account and how you can reduce it.

Clarification

Each transaction with the credit card attracts many fees. The most important ones can be put under two groups: Merchant Service Provider fees and Interchange fees. The “Interchange fee” has to be paid to the credit card company. It is calculated as a percentage of each transaction amount together with a small fixed fee. The “Merchant Service Provider fee” goes to the company providing the merchant account and is calculated in the same way.

Most owners of small businesses sign a contract for the merchant account which has a good “Discount rate”. The rate includes the merchant service provider fees and the interchange fees. The problem is: the merchant would not have seen through the fine print thoroughly and therefore will not be aware of what he is being charged for. With out having the correct information it is not possible to get the right account.

Knowing the reason for variation in fees

Another reason which increases the confusion is “variable fees”. The fees are directly dependent on the category of your transaction. There are over a hundred different categories. This will result in different fees from different merchants for the same item. This confusion makes it more difficult to find a better deal.

Is a re-negotiation possible?

The volume of your transactions will determine the degree of leverage you have to re-negotiate a better fee with your service provider. You will have a high degree of leverage to negotiate it your business is processing more than $20,000 every month for some time. If not, you cannot do much. But the “merchant service provider fee” can be reduced by choosing the right provider.

The main problem is that: merchants don’t know how much they are paying for the different fees. They don’t try to find out. Therefore, they end up paying higher fees. You can lower your fees by finding out how much of the discount rate is going to your service provider and re-negotiate this component for a lower one. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.