Today’s go-cashless era demands that businesses accept credit card payments from clients. With this, businesses have more customers and they easily trace transactions. However, businesses accepting credit cards have processing fees to pay in this line. Credit card processing fees can be categorized into several sections

Credit Card Processing Fees Consist of:

  • Transaction fees.

Such are fees per transaction and they are made up of assessment fees, interchange rate, and payment processing markup.

  • Interchange fees.

Your processor sets interchange fees to offset any risks of the transaction. How much you pay as interchange fees is dependent on your industry, and the type of card that your customer uses.

  • Assessment fees.

These are charges you pay to allow customers to use their card brand. The fees also cover the cost of processing transactions and they are non-negotiable.

  • Flat fees.

These are rates that the processor charges for all transactions no matter the type of card you are using. In this case, the processor will take a percentage of the purchase.

  • Recurring fees.

Depending on the provider you choose, these are fees you are charged monthly.

  • One-off fees.

These fees are to be paid when setting up a merchant service account, at the beginning, middle, and end. These fees are also charged in situations where your customer’s card is returned and early termination.

  • Tiered fees.

Any transaction done by a business has its risk levels and tiered fees are paid in this line. Since the level of risk may vary, these tiered fees are grouped into:

  1. Qualified rates. Transactions in this tier must meet all the processing requirements that the processor sets. Such fees are expected to be lower since the low risk is involved.
  2. Mid-qualified rates. Not all transactions carried out in the business meet the processor’s requirement such as keyed-in transactions and the credit card is not physically available. Any transaction in this tier has a high risk of fraud and businesses pay more to cover such.
  3. Non-qualified rates. These are a group of the transactions that are charged the most as they don’t qualify in any of the above tiers.

Tips to avoid high credit card processing fees

There is no joy when paying too high fees and you need to be concerned about how to lower fees. It is possible to avoid high credit card processing fees when you take some steps in this line.

  • Utilize Surcharging (aka Cash Discount)

Rather than having the business owner eat the fees, you can pass along a line item of a flat rate to cover the cost of paying the credit card fees.

Customers have the right to decline the surcharge and not use a credit card as payment. They can opt to pay for that purchase with cash, check, or a debit card. If they choose one of those payment methods, a surcharge can’t be added to the final bill. Additionally, you can’t make a profit from the surcharge. By law, your surcharge can’t exceed what you pay for those fees. A few states don’t allow surcharges for credit card purchases. They include:

  • Colorado
  • Connecticut
  • Kansas
  • Massachusetts
  • Reduce the risk of credit card fraud

Business owners pay higher processing fees when the processor deems any transaction as high risk. Lowering fees is easier when you opt for approaches such as swiping credit cards and entering security information. Such guarantees lowering fees since the charges for low-risk transactions are lower.

  • Using an address verification service

Such is a system that allows you to verify the cardholder’s billing address and the card issuer. When using the service, the address entered by the customer is compared to that on file to reduce credit card fraud. Such a process works as it rejects transactions that are deemed to be fraud and no high rates are charged.

  • Consulting with a credit card processing expert

Business owners may be paying too many fees due to a lack of information. Thus, you can have a better understanding of how credit card processing fees work when you consult with an expert. Because of these professional’s knowledge in the matter, business owners can expect some tips on how to get lower rates.

  • Invest in a Secure Payment Terminal

Most businesses opt to lease payment terminals as it seems cheaper in the short run. When you look at the long-term effect on your processing fees, you realize it is more expensive. In cases where you want to change the processors then you have to start the process all over again.

To avoid being charged extra by leasing payment terminals, it is advisable to buy your hardware and protect it for the easier running of your business. The pro is that you get a new system in case of accidents or wear and tear at a small fee.

  • Be PCI (Payment Card Industry) Compliant

Credit card companies have set standards that protect customer’s data from getting into the wrong hands. Breaching the set rules prompts you to fines and extra charges. To avoid such, you should know the set rules to follow and avoid being charged extra. Moreover, some payment service providers charge compliance fees and such is an extra cost to you. You should avoid such by dealing with a service provider that doesn’t charge these.

Work with the Best Merchant Service Provider in the Industry

Choosing the right payment processor is key for your business. This will help you lower your overall credit card processing fees. To achieve this, you should check and compare the pricing models. To get the lowest interchange rate, choose a merchant that uses a subscription-based pricing model as it avoids extra contract fees. You should also negotiate with your merchant by leveraging your transaction volume to get lower fees.

Avoid Cancellation Fees

Cancellation of contracts with your merchants will attract extra costs to your business. For this reason, you should choose a merchant that uses a subscription flat rate policy. With such, you can pay up to a monthly rate and cancel without incurring any fees. Cancellations of contracts often occur when you realize that you are paying more than you should and it is due to hidden charges. To avoid such, ensure you go through the statements and understand all the charges you get.

Choose a Payment Processing Plan that Befits your Business

Based on the number of transactions a business has, your merchant can charge you differently depending on the payment processing plan you choose. You should take advantage of such plans to lower your processing fees. If you have more transactions, you should choose a tiered plan to allow you to get lower fees due to the high volume of transactions. You should also compare all the options available and choose the plan for your business.


Some of the steps such as using an address verification service and hiring a consultant may seem like additional fees. However, they are worth it as they save you a couple of dollars. Similarly, you need to know if there are any hidden fees from the processor you choose since such helps to reduce your spending in this line.

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