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3 Tips to Lower Your Processing Rates

Getting a good credit card processing rate for your business can be tough. With so many different Payment Processors and rates out there, it’s almost impossible to tell if you’re overpaying or not.

We want to give you 3 tips and tricks that you can use to get best payment processing rates possible.  If you have any questions, please reach out using our Contact page.


1. Understand the Pricing Models

Payment processing rates come in all shapes and sizes.  The most common pricing models are interchange plus (or interchange pass through,) tiered, and flat rate (or flat fee.) Merchant processing pricing models differ based on how interchange rates are handled.

For example, if you are priced on interchange plus you will pay the exact interchange fee of each card you take. If you are on flat rate you will pay a flat percentage for all cards regardless of their actual interchange rates.

That being said, be sure to research which model is best for you based on how you process transactions and what type of cards you normally take. If you take a lot of debit cards in-person than interchange plus is likely your best option. Conversely, if you take a lot of credit cards over-the-phone than a flat rate is a better option.

2. Cash Discount (0% CC Fees)

A majority of what you pay in merchant processing fees goes right to the Card Brands which are called “interchange fees.” The rule of thumb is credit cards have a higher interchange at 1.8% compared to debit cards at 0.3%.

There is a way to knock the credit card interchange rate down to 0% known as Cash Discount. A Cash Discount program allows you to pass through interchange fees to the customer on credit card transactions. For example, let’s say an egg sandwich is normally sold for $5.00. This would now be your cash price. With Cash Discount enabled, when someone wants to pay for the egg sandwich with a credit card the price would be ~$5.15.

Keep in mind, there are a handful of rules and regulations for Cash Discount programs. It is up to you to make sure you are complaint and what you’re doing does not classify as a surcharge. It’s important to note that surcharging is prohibited in many states, but Cash Discount programs are legal in all 50 states. Do your own research and make sure your processing company knows what they’re doing when it comes to Cash Discount compliance!


3. Level II and III Processing

As we just mentioned, interchange fee’s are the bulk of what you’re paying each month to process payments. However, the more data you capture at the point of sale (tax, billing address, etc.), the lower your interchange rates clear. 

This is known as Level II and III processing and simply involves entering more information about the transaction when you ring it up. Level II and III processing can lower your overall payment processing fees by 0.2% to 0.8%.

Get with a payment company that knows what they’re doing and can set you up with Level II and III properly. This is your money to take back from the banks and processors, don’t leave it on the table!

Bonus Tip:  Get a Written Proposal

When shopping for a new payment processor, don’t settle for the salespersons word that “your rates will be lower.”  Have them prove it. 

Simply as for a side-by-side comparison of what they’re offering vs. what you pay now so you fully understand what the benefits are.  This will help you understand what rates you will be paying if you switch, and also what to look for on the application you’ll need to sign.

If you want to have a Statement Analysis done by a Specialist here, just use the button below! Once completed, a Specialist will send over a side-by-side comparison to give you an idea of what is possible.

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