While there are many things that separate one credit card processor from another, pricing is a huge factor that has an immediate impact on you, the merchant. But with over 1,200 separate interchange rates, the age-old question of “What rate do you offer?” requires a much more detailed response. Several factors affect the actual cost of accepting payment with a credit card – industry, customer card type, processing method, settlement time, etc. Many variables impact what your customer’s card actually costs you. So, how do you lower your rate when processing credit cards?
Although there are over 1,000 different rates, and numerous factors that impact the cost of accepting any given credit card, you are not helpless in reducing your costs. There are definitely best practices that can help you reduce costs and improve your bottom line. Here are four ways to lower your rate when processing credit cards.
1. Swipe or Dip: If you have a customer in front of you, swiping or dipping the card will get you a lower rate than manually keying in the same card. Interchange rates are closely related to risk – typically, the more risk a transaction holds, the more expensive it is. When you key in a card manually, the card brands (Visa, MasterCard, Discover, American Express) see it as “card-not-present.” Any time a card is considered to be away from the point of sale, higher risk is implied, and thus a higher cost for that transaction. Long story short: if you can see the whites of their eyes, swipe or dip the card. Do everything you can to avoid manually keying in a transaction.
2. Data, Data, Data: If you operate in a card-not-present world (e-commerce or mail/telephone orders), the more customer information you can provide, the lower your rate will be. With every transaction, provide the AVS information (the customers’ street address and zip code), which will help qualify your transactions for the lowest possible rate. Even greater savings can be achieved with Level III interchange. This is unique to business and purchasing cards. Lowering the rate to this level requires a substantial amount of data to be submitted, usually from a specialized gateway like the one offered by BASYS Processing.
3. Settlement Times: Setting up your terminal for auto-settlement is a quick update to any piece of equipment and can help improve your situation immediately. Many merchants have not been taught that leaving transactions unsettled in a terminal for more than 24 hours actually makes those transactions cost more! Except for very unusual circumstances, your processor should set your equipment to auto-settle at the same time every day.
4. Right Tool for the Job: While the credit card terminal is still the standard means of accepting a card payment, there are numerous other solutions, frequently unique to an industry. There are systems designed to accept credit cards specifically for e-commerce businesses and systems that are designed just for restaurants. Other systems are designed to operate in a business-to-business (B2B) environment, or for companies whose primary sales are recurring monthly payments. Just because the terminal you’ve been using for the last five years technically works doesn’t mean it’s the best fit for you right now. We recommend continually working with your credit card processor to learn what options are available to you, and to ensure you’re using the solution that can offer you the lowest rate qualifications and other helpful functionalities.
These are some general ways you can lower your rate and control your costs, but the most important thing is to stay engaged. Just because you’ve always paid certain fees doesn’t mean you still need to be paying them.