Amy Hardison White

How to save money by negotiating credit card processing fees

Credit card processing fees are one of the costs of doing business in our modern world. They provide a flexible, fast way to get paid - a huge benefit despite the additional costs. And though it might seem like processing fees are fixed, the old saying rings true: everything is negotiable.

Unlike negotiating for a new car or salary, processing fees are more complex. What you end up getting with your credit card merchant can really impact your costs, your customers’ experience, and your own experience with the merchant. How can you negotiate processing fees while protecting yourself and staying as informed as possible? Here are a few tips:

Get multiple offers. When starting your search, research the different merchants that may be a fit for your business. Some merchants are a better fit for in-person transactions versus card-not-present transactions, for example. Once you have a short list of merchants, ask for a quote from each one. Having multiple offers allows you the ability to compare and choose, both of which give you a higher level of control in any negotiation.

Make direct comparisons wherever possible. If you’ve ever tried to comparison shop before, you know that evaluating similar items is a challenge. Processing fees are no different. Many merchants include fees that cover the same service with different names. Some include equipment in their fees while others don’t.

When asking for quotes from merchants, make sure to request Interchange-Pass-Thru pricing (also called cost plus or interchange plus pricing). Interchange-Pass-Thru pricing only includes the wholesale fees given by Visa or Mastercard to the processing company. Many processors will not proactively offer it as it is generally their least profitable pricing structure, so you’ll have to ask.

Understand which fees are negotiable - and which are not. Interchange-Pass-Thru fees will give you the most clear picture. They also represent the portion of processing fees that are not negotiable, as the processor owes these fees to Visa or Mastercard. However, other fees stipulated by the processor are fair game.Incidental fees, flat fees, and “plus” fees are all examples. Take some time to review the different quotes you received, and ask more expensive processors to price match on negotiable fees.

Look for ways to save. When comparing processors, does one include expensive processing equipment that you don’t need? Does another processor offer a processing gateway that would be more expensive to purchase separately? Does one processor offer a steep contract termination fee where another doesn’t? Consider different ways to save money for your business while evaluating fee structures.

Weigh intangibles like customer service. As a consumer, you might have experience using a particular processor when making a purchase. Think back to your experience - consider if it was positive or negative, and how that processor might fit your customer base. Ask other business owners about their own experience as a customer of that processor, and look for reviews online. Cost is a consideration, but losing customers to a poor processor experience or tons of your own time resolving processor issues can be a huge headache.

Take as much time as you need. Don’t try to rush through the process, no matter how urgent the need. And if the broker tries to pressure you to close quickly, push back - or move on to another one. A quick close is a surefire way to pay too much for processing fees.

Evaluating credit card processors may seem like an overwhelming task, but look at it this way: just approach it like any other negotiation. Do your research, get as much comparable information as possible, and consider price and other factors before making your decision.