How Merchants Can Help Offset Credit Card Processing Fees

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Merchants know that customers are continuously looking for ways to use technology to make their payments. And giving clients the option to pay via a credit card – and the fees that come with processing those transactions – comes with running a business.

Credit card processing can seem complicated, overwhelming, and expensive even it if makes running a business more efficient and it makes customers happy. Rather than paying these fees blindly, every business can influence and help control these costs through simple, effective actions.

Simple Ways to Influence Your Credit Card Processing Fees:

Understand Current Pricing Structures 

There are many types of credit card processing models in the payments industry. In most cases, being set up on the Interchange plus (aka cost plus) pricing model will deliver greater visibility into the actual network rates and expose areas for significant savings.

  • Interchange plus pricing is pretty transparent, as far as pricing models are concerned. That’s because the credit card processor charges a fixed rate on top of the interchange rate. So, merchants can easily quantify what they’ll be paying each month for card processing rates.
  • Tiered pricing divides consumer transactions into different bundles or tiers, for which there are different rates. This is also called a bundled pricing model. It rarely ends up being cost-effective for merchants and makes it nearly impossible to determine their own monthly bill.
  • Flat fee pricing is one of the most transparent pricing models. Since all of a merchant’s charges are bundled into one flat rate, there are fewer surprises on their monthly statement. They can pay a monthly fee for payment processing instead of paying each time they process a payment. Flat rate pricing is also called a subscription model or membership-style pricing.

Pass on Fees to Customers Via Programs 

It’s possible to accept credit cards without taking the hit for credit card fees. Below are some options that can really make a difference, but merchants need to dig into the regulations of these programs as each state has specific guidelines to follow.

  • Dual pricing is a way to for merchants to build credit and debit card fees into their product or service pricing. When customers pay with cash, merchants provide them a discount.
  • Surcharging is similar to dual pricing, but this option adds a surcharge to payments made by credit card. Cash and debit card transactions receive no surcharge.
  • Convenience fees are similar to surcharges but apply only in cases where the consumer is choosing to pay online or by phone versus the standard method of payment for that transaction.

What is the Best Fit for Merchants? 

Offsetting credit card fees with pricing models and fee programs might yield just the extra margin a business needs to survive and grow. How does a business know which one is the best to use?

  • Talk to a credit card processor about their fee structure and the programs they offer. Not all provide their customers with the full range of options. A merchant’s software must be set up to automate the process and abide by all federal and credit card network regulations, and point-of-sale terminals also have to be equipped.
  • Merchants need to understand that convenience fees apply only in limited circumstances, so they may not work for every business.
  • Merchants should consider if they would offer customers a discount (for paying with cash) or charge them an extra fee (a surcharge). While a surcharge program might be the right choice in some situations, dual pricing is typically more palatable to consumers.


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