Save Money on Your Business Credit Card Processing

Most merchants pay too much for their credit card processing. Below are some tips to avoid unnecessary fees.

1. Tiered Pricing. Most merchants are set up on tiered pricing. That means all the transactions fall into one of three tiers:

Qualified - This is the most secure and least expensive tier. be sure you swipe credit cards each time you run a transaction to provide the best opportunity to clear at this level.
Mid Qualified - There are many factors that can make a transaction downgrade to mid qualify, but the most common is keying in the account numbers. If you must key in the numbers, be sure to verify the card billing address and CVV code.
Non Qualified - Common reasons cards will downgrade to non qualify is because the address verification did not match or the card is a corporate card.

2. Interchange Plus Pricing. Interchange plus pricing is a pricing method which used to be reserved for only the highest volume merchants. The big benefit to this pricing strategy for a merchant is you have the same mark up from your processor for all types of transactions. Ask your account representative to explain to you if interchange plus pricing could help your business.

3. Batching your terminal. Batching every night ensures that you get the best rates. If you don't batch your transactions on the day they are run, you encounter the risk of all activity in the batch downgrading to non-qualify.

4. Authorization and tips. This tip applies to all merchants that have a tip line on their credit card receipts. When the card is authorized at the time of the sale, your machine automatically authorizes 20% more than the amount of the transaction, to allow for gratuity. If the customer tips more than 20%, the total of the settled transaction will be greater than the authorized amount. This causes the entire sale to downgrade to mid or non qualify.

5. Teaser Rates. There are many fees associated with credit card processing. Don't be fooled by the teaser rate. If you see an offer for processing fees for under 1.69% for credit cards or 1.15% for debit cards, this should be a red flag. Some processors are willling to take a loss on some processing rates becasue they are making up the difference and then some on other rates. Be sure to review all rates and fees before signing on the dotted line and don't hesitate to ask questions if anything seems out of line.

6. Understand Interchange. A large part of the price your processor pays for turning your customer's plastic into cash for you is called interchange. Each type of transaction is assigned a cost by Visa and Mastercard based on several factors such as risk, ticket size, industry type and other factors. The cost assigned to each of these transaction types is called the interchange for that category. Visa and Mastercard both post their interchange rate charts on their website. take the time to look the numbers up so you can be better prepared the next time you want to renegotiate your deal.

7. Termination fees. Typical processing agreements run one to three years. Each processor has a different policy regarding early termination. Your contact should clearly state the cancellation fee under your fees section. If there is nothing stated, be sure to ask the sales rep to put the fee in writing for you so there are no surprises down the road.

8. Equipment Costs. Don't get caught overpaying for your credit card equipment. Many processors use high priced equipment sales or even worse, long term leases to generate revenue to pay sales commissions. Don't get caught in this trap. A fair price for a quality countertop terminal is $300 to $500. For wireless equipment you should expect to pay $700 to $900. Many processors also offer free equipment. These programs work well for businesses that do not want to spend any money up front, but the usually come with higher mid and non qualify rates.