Types And Tips To Negotiate Credit Card Processing Fees To Get The Best Deal

Types And Tips To Negotiate Credit Card Processing Fees To Get The Best Deal
  • Opening Intro -

    When you want to hire a merchant processor for your business to accept credit card payments you must ensure that you do not pay more out of your profit on sale to the credit card processing company in the form of different fees.


It is wise to negotiate on these fees with the merchant account provider beforehand so that you avoid costly surprises in the end.

If you want to negotiate better and with confidence you will first need to know the different types of fees that these companies charge from you. You may even come across companies that will advertise that they provide free credit card processing service but it is your responsibility to make sure that they really provide what they claim to. Therefore, research well.

Different Types Of Monthly Fees Charged

You must keep an eye on the different types of monthly fees they charge, especially those merchant account providers that charge interchange-plus fees. These types of merchant processors often charge ongoing fees with different names and forms such as:

  • Monthly processing fees:

    The providers may charge an annual or monthly fee in addition to the fixed rate or percentage rate for each transaction.

  • PCI compliance fees:

    This is a specific fee charged by the service providers for compliance with the standards set by the Payment Card Industry or PCI.

    As per their standards, it is required that every merchant that accepts credit card payments must follow their guideline while accepting and processing credit card payments.

    However, a few service providers may not charge a PCI compliance fee separate and include it in their monthly fee.

  • Customer service fees:

    This is the special fee charged by the service providers for providing phonebased customer support. Once again, there may be a few service providers who may not charge such fees for phone, live chat or email support.

Therefore, fees charged by the merchant account providers may vary significantly simply because it is based on the type of provider you choose. Therefore, it is recommended that you interview the service provider thoroughly and ask as many questions as you can before signing on the dotted line of the service contract.

Different Types Of Upfront Fees Charged

In addition to the ongoing monthly fees the service providers may also keep an eye out for the different types of upfront, set up and cancellation fees. Yes, there are a few service providers that will charge such fees which you can easily avoid if you do some research and choose the right service provider according to your need and affordability. These fees include:

  • Training fee:

    This is the fees that thecredit card processing company will charge you to show you how to use the specific system that you purchased.

  • Customization fee:

    This is the fee they will charge if you want a system to be tailored to suit your specific needs.

  • System integration fee:

    If you want to integrate the software provided by the credit card processorwith your accounting software or ecommerce solutions, they will charge you for such integration.

  • Cancellation fees:

    If you want to change service providers the current service provider may charge you an account cancellation fee, especially if you want to change them before the tem specified in the contract elapses. However, if you have a no-contract monthly plan with the service provider then you can make such changes without paying any penalties.

If you want to avoid any undesired costs on your merchant account providers’ statement, it is better to ask about these fees beforehand. Ideally, it is recommended that you get a written no-fee agreement before you sign up.

Negotiating For Credit Card Processing Fees

You will be able to save a lot of money on your credit card processing feesif you negotiate on the fees. This is specifically recommended if you are doing credit card processing in large volumes.

If you work with an interchange-plus provider you will have to pay a fixed percentage rate along with a fixed fee for each transaction. Therefore, when you negotiate, make sure that you ask for a lower fixed percentage as well as a lower per-transaction fee. Ideally, when you negotiate for a lower fixed percentage rate, consider that it does not impact your bottom line.

other valuable tips:
  • When your average sales volume is high and is of highvalue even a difference between a 2% and 3% rate can save you a lot of money in the short as well as in the long run. There is however no need to worry much about the per-transaction fee as that will be in comparison pennies, literally.
  • On the other hand,you should negotiate for a lower per-transaction fee if you make a lot of lower-priced sales. It is all mathematics that you should do before you start the negotiation process.

All you have to do is ensure that you are getting the best credit card processing fees and deals from the processor.

  • You will need to consider the effective rate for that matter which is ideally the total average percentage that you pay as fees to the credit card payment processor for a single transaction made by a single card. In order to calculate the effective rate, you will need to divide the credit card processing fees by the total deposits made in the same period.
  • The average effective rate for credit card processing fees may vary from one service provider to another. In general, the merchant processors are likely to provide you with an effective rate that may be anywhere between 2 to 3%.

You may negotiate with the service provider to bring it down especially when you high sales value and volume.

The Bottom Line

In order to make sure that you make the right deal you will need to know the different types of fees, the structure, understand the statements. You will need to compare the fees charged to the merchant statement, find out the possibilities of any savings and then go ahead with your negotiation process.

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