You’re used to negotiating with your customers. Yet, at the same time, you don’t do this with your merchant account provider. Why not? It seems counter-intuitive to do it because you figure these are the people processing your credit card transactions. They’re immune to “the deal,” right? Wrong. Here’s how to negotiate for lower fees.
Throw Your Weight Around
Use your high transaction volume as leverage for lower fees. If you don’t have high transaction volume, this is something to work on. Even if you have to lower the per-transaction sale amount, the sheer number of transactions you do will more than likely be enough to negotiate lower fees. Remember, merchant service providers make their money on volume. Show them volume, and you’ve got a bargaining chip.
Reduce The Risk Of Fraud
Even payment gateways, like Authorize.net, are concerned about fraud. The highest risk of it is associated with keyed-in credit card numbers. So, when and where you can, always swipe the card. You will lower your fees immediately on a per-transaction basis.
Also, train your employees to key in the security code on the back of the card. This will further lower the risk to the service provider. Guess what? It also lowers your fees as a merchant.
Do Business Direct
You may be surprised to learn that many merchant providers don’t actually run the transactions themselves. What they do is send the transaction off to be processed elsewhere. This is extremely common in online sales where payment processors act as middlemen between the customer (you, the business owner) and the merchant service provider.
They upcharge you for this convenience, though. And, they may not be offering you anything that a large bank cannot. So, go direct to large banks that do run their own transactions.
Do Your Batch Process Every Day
It’s common for some businesses to batch process every other day, or even once a week. This is true especially when a business has “slow days” throughout the week. But, this only increases your fees. The longer you hold onto that information, the higher the risk you represent to a service provider. So, batch process every day. Not only will you get you money faster, but you’ll lower your fees on every transaction.
Demand Interchange Pass-Through Pricing
This is a “cost-plus” pricing model. It’s the most fair, and the most transparent, pricing method. It’s also the only real way to do a side-by-side comparison between vendors. What it is, is a wholesale itemized network fees. These are the fees that are passed along from Visa, Mastercard, and other major card issuers. If you don’t know what they’re charging, you don’t know how good a deal you’re really getting.
Many processors do not like disclosing this, however, so you must demand to see the itemized pricing. If they refuse, don’t do business with them. Find a processor who will disclose fees like this.
Angela Williams started her first business as a child weeding gardens in her neighborhood. She has learned savy business and financial skills over the years and enjoys sharing her insights through blogs and small business sites.
