How to Avoid paying too much in Credit Card Processing Fees

November 15, 2010, by admin

I’m sure as a business owner you have enough to do without having to figure out how Credit Card Interchange Fees work. The good news is it’s not that complicated. There are hundreds of different interchange fees, what is important is to understand that interchange is essentially the wholesale rate that banks charge each other in order to process a credit card or debit card transaction. It is the cost of doing business, usually around two percent of the transaction amount.

Although the card companies set interchange rates there are things you can do to help avoid paying too much.

Review Your Charges Annually

At least twice a year (generally every April and October), Visa and MasterCard re-assess their processes, regulations and fees then announce rate changes and new fees. Many times your existing provider will layer on additional rate increases above the Interchange adjustments. Call another provider, fax in your merchant statement and have your account analyzed to “catch” these hidden rate increases.

Use an Interchange Pass Through Program

In order to pay the lowest fees when processing credit cards, a merchant’s goal is to pay as close to interchange as possible. A merchant account that uses an Interchange Pass Through pricing method applies processing fees by adding a small percentage to the actual Interchange Rate for every transaction and all dues and assessments are passed through directly at cost. This ensures that you only pay the true interchange rate in addition to a small mark-up that goes to their merchant service provider. Many times your existing provider will layer on additional rate increases above the Interchange adjustments. Call another provider, fax in your merchant statement and have your account analyzed to “catch” these hidden rate increases.

Avoid Downgrades Whenever Possible

A downgrade occurs when a transaction falls to a higher rate then what your business may qualify for. Whenever possible swipe the card at the point of sale device in order to reduce fraud and qualify for your lowest rate. For those of you that own some sort of on-site service or repair business, invest in either a wireless credit card processing terminal or look at some of the newer solutions such as RoamPay or PayWare mobile which allow you to use your mobile phone as a point of sale device.

Obtain the Correct Billing Information

In order to avoid downgrades for Card Not Present Transactions always obtain the correct billing information for the card being used. Credit Card Companies use an Address Verification Service (AVS) for Domestic Cards to determine if the billing information you enter matches the Card you are keying in. Always collect the Billing Address of the Card including the Postal Code as well as the Card Verification Code. The Card Code is the 3 Digit Number at the end of the Signature Panel on the back of the card for Visa, MasterCard and Discover. For American Express it is the 4 digit number on the front right hand side of the card above the last 5 digits of the card number.

Make Sure your Point of Sale Device is Programmed Properly

If your Point of Sale Device is not prompting you for Billing Address information as well as the Card Code, contact your Merchant Service Provider right away to get your device updated in order to pass that information to the Credit Card Companies. Another way transactions can downgrade is if you do not Settle or Batch your transactions within 24 Hours of obtaining an Authorization. Virtually all point of sale devices have the ability to Auto-Settle or Auto-Close at a specified time on a daily basis. If your device does not have that option enabled, contact your Merchant Service Provider right away to get your program updated.

Train Your Staff

If you are not the person directly responsible for processing credit cards at your company it is important that you properly train your staff to avoid downgrades. Routinely observe your cashiers, monitor transactions and carefully review your month end processing statements.

Adam Johanningmeier is the author of this article for Merchant Services. Find more information about Credit Card Processing here.

Eliminate Credit Card Processing Fees on Automated Recurring Billing

October 11, 2010, by admin

I know what you are thinking, here we go again, another Merchant Services company claiming to save my business money on Credit Card Processing. I know most of you would agree that you are tired of Merchant Service companies contacting you about your credit card processing rates and even more tired of the high fee you are paying. Don’t worry I’m not here to talk about how our company is going to save you money on your credit card processing fees. I’m here to talk about how our company can help eliminate them.

Here is a little homework assignment. Next time you are at your office I want you to pull out that convoluted processing statement and run a simple calculation. Take the Total Fees you paid and Divide it by the Total Amount you processed in Credit Cards that month. Once you have that number Multiple it by 100. That will give you the overall average percentage you are paying to accept credit cards.

Why Accept Credit Cards? Because Merchant Services Increases Your Sales!

August 27, 2010, by admin

Resist the Temptation to Terminate your Credit Card Processing.


In this horrible marketplace every business is looking for ways to save money.  Some Merchant’s are even considering terminating their credit card processing services to save as little as two percent of those sales made by Visa, MasterCard and Discover, and three percent from American Express sales.

“Don’t do it!” says Gino Kauzlarich, President of “It’s a false economy.  If I agreed with that, we’d both be wrong.  People today in our communities have less cash in their wallets and money in their checking accounts than ever before, attributable most likely to the high unemployment rate gripping the nation and dried up credit markets.  Folks are much less likely today to “impulse” spend.  To turn away sales opportunities by limiting yourself to these much, much lower “cash only” amounts tight fisted mentality is simply a mistake.” Read More…

Congress Approves Credit Card Processing Regulation Amendment

June 21, 2010, by admin

How the “Act” will affect your Credit Card Processing


On June 21, 2010 Congress approved new regulations that will change credit card processing in America as we have known it since its inception in the 1960’s. Included in the Restoring American Financial Stability Act of 2010 (the “Act”), the regulations allow the Federal Reserve to cap debit card interchange at a level that’s “reasonable and proportional” to the cost of processing debit card transactions. Before retailers can accept credit cards they must apply for a merchant account.  All Merchant accounts include contract terms which will be changed by the Act.


Since debit cards represent the majority of transactions in the US, the impact on merchant services via radical changes to the merchant account pricing and terms via this new government intervention is potentially significant, though difficult to predict. Read More…