Ways to save money on your processing fees.
In a perfect world on a perfect day, with the perfect customer, with the right credit card you get the rate your processing company said you would get. But change just one thing and the transaction gets a downgrade. Any number of things out of your control will result in a downgrade. There are things that are within your control that if over looked can cause a downgrade. What is a downgrade you ask? Well, a downgrade is an added cost to the transaction in the form of additional basis points.
Reasons for a downgrade.
- If you are a retail merchant, anytime you key in card information.
- When your customer uses a rewards card, or a corporate card.
- If you don’t settle you account within 24 hour of the transaction.
- If you have a MO/TO account and you don’t use address verification service (AVS)
- Your terminal is not programmed right.
- Your account is not setup right.
Swipe customer cards whenever possible
If you are hand keying card info it is a higher risk transaction for your processor. Customer info is coded on the card is not key in, so the physical security of “Card Present” is lost and you get downgraded to a Card Not Present transaction.
- Get a card reader or fix the one you have
- Train sales people to avoid unnecessary keypad transactions
Accept PIN Debit
More and more customer are using debit or check cards. This is an opportunity to reduce you fees because debit cards when processed with a Personal Identification Number (PIN) will normal process at a lesser rate that a credit card.
- If you don’t have a PIN Pad, get one.
- Train your sale people to ask the customer to enter their PIN
- Make sure your account and terminal is setup properly to accept debit transactions.
Card Not Present (CNP) transactions, Processes at a higher rate than CP transactions. You can ensure that a CNP transaction will process at the lowest possible rate by taking certain steps.
- Use AVS address with zip code
- Make sure that your authorized amount is not greater that your settled amount. This can happen when you ship a partial order of the authorization. Visa will let you reverse the authorization to balance the auth and settle amount. When you are ready to ship the balance of the order get a new authorization. (note: Some MCC are set up for an unbalanced auth to settled amounts like: Restaurants and Taxis, or any type of business that tips are expected)
- Make sure that your company phone number is programmed into your indentifying info that is passed to the card processor.
- Avoid telephone authorization or Voice Auth. This type of authorization doesn’t capture all the info on the card, and again is subject to a downgrade. Make every effort to process the transaction first and as a last effort get a telephone auth.
- Make sure your equipment is set up right to process CNP transactions; if it is set for CP Transactions only, and you process CNP; your transaction will be downgraded.
- Make sure your account is set up with the right Merchant Category Code (MCC.) You qualify for a lower rate.
- If you process a lot of commercial card volume; make sure you are set up to capture Levels II and III data. Level II and Level III capture a lot more data and that make the transaction more secure.
Avoid Charge Backs
- Check card for signature, check IDs.
For Commercial business; consider becoming an Automatic Clearing House (ACH.)
The Automatic Clearing House (ACH) is a U.S. Government run system that allows money to be electronically transferred, for one time payments or recurring payments, from one bank account to another, through what’s known as an Electronic Funds Transfer (EFT) in the form of a debit or credit. Recent statistics show that ACH payments are definitely making an impact on the way today’s consumers make payments. For large transaction this is really the way to go, because it is a flat fee NOT A PERCENTAGE. So for the right merchant ACH can be a huge savings.
- Eliminate trips to the bank
- Easy to set up and use
- 24 hour online reporting
- One time or recurring payments
Know your true effective processing rate.
Here is how you calculate your true rate:
| Visa and Master Card Calculator | |
| TOTAL PROCESSING FOR THIS EXAMPLE IS $3,000 | |
| Statement Fee | $ 10.00 |
| Total Transaction Fee 100 @ 20¢ | $ 2.00 |
| Batch Fee | $ 10.00 |
| Whatever Fee | $ 9.95 |
| Total Other Fees | $ 31.95 |
| Processing Fees $1000 Each | |
| Transactions @ 1.69% | $ 16.90 |
| Transactions @ 3.28% | $ 32.80 |
| Transactions @ 3.58% | $ 35.80 |
| TOTAL PROCESSING FEES | $ 85.50 |
| TOTAL FEES | $ 117.45 |
| DIVIED BY $3,000; TOTAL AMOUNT PROCESSED | 3.92% |
NOTE: SUBTRACT OUT ALL AMERICAN EXPRESS AND DISCOVER TRANSACTIONS
For a Free Analysis of you merchant statement check out www.ipsi-site.com
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