For businesses, every swipe of a card or completion of an online purchase means a loss of that percentage to a bank’s transaction fees. Although petty deductions add up in the long run, they still affect the bottom line. This article will examine some effective strategies for keeping transaction fees low and enhancing the well-being of your business in terms of finances.
Choose the Correct Payment Processor
The payment processor determines the amount of money a business spends on transaction fees. Each payment processor carries its fee structure, different in percentages as well as fixed rates applicable per transaction. Since a small processing fee will save a big part of the money, you need to be very careful in the selection of the correct processor. Some processors also give discounts for bulk transactions for businesses that clear a lot of transactions. It is also very important to compare all the rates by providers and should not finalize on the first one.
Use Interchange-Plus Pricing
Most businesses are not aware of the number of pricing models that exist with payment processors. The interchange-plus pricing model can cut costs to businesses. This model charges you the interchange fee– that is, the fee that goes to the card networks plus some small amount of markup by the payment processor. Compared to flat-rate pricing, interchange-plus will provide much clearer insight into where your money is going. Although this seems to be a more complex model, interchange-plus pricing tends to be cheaper in the long run, especially for businesses with high transactional volumes.
Take Advantage of the Best Services Available
Although various service providers charge different transaction fees, some business-to-business transactions perform well with specific fee structures. What works for one type of business is not necessarily the best fit for another. This is where choosing the best merchant services for your business based on specific industries is of prime importance.
Propose Cash or Debit Card Payments
One of the most straightforward ways to get transaction fees down is to let customers know you want them to use forms of payment that cost your business less. This cuts down on fees but accelerates the pace of the payment process since cash transactions do not need authorization or processing time. Over time, encouraging these alternative payment methods can really make a difference in lowering fees.
Monitor Fees and Check Them Regularly
Like every other cost of doing business, transaction fees need to be checked and monitored regularly. Fees can change without notice, and keeping up with changes will ensure that you are not overpaying. Most businesses unknowingly accept rate increases and or ancillary fees purely because they are not monitoring their payment processor’s statements closely. Regular monitoring of fees will identify inconsistencies or chances to renegotiate with your providers. It is also good practice to shop around periodically for new payment processors, as competition in the market can often bring better deals. Monitoring is not only helpful in letting you know what’s going on, but also will keep your business running efficiently financially.
Conclusion
Transaction fees are simply part of the cost of operating a business. The business saves large sums of money in terms of transaction costs by selecting an appropriate payment processor, depending on interchange-plus pricing models, negotiating better rates, using industry-specific merchant services, encouraging lower-cost payment methods, and reviewing fees continually. All these small changes seem to make little difference but could be a lot for your company’s bottom line in keeping more of your hard-earned profits.
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