Taking credit cards at your store and online is convenient for your customers and because all those transactions are electronic, it makes bookkeeping a bit easier since the data can be easily downloaded. But the fees you pay can really add up.

Here are some ways to save money on your credit card payment processing.

Run the Numbers

If you’re not keeping track of how many of your transactions are by credit, debit, and by cash, then you might not have a true handle on the cost of your products. It would be worth it to gather that data – even for a month or two so you can really see how much profit you’re making on each product you sell.

For example, if you know that 60% of your transactions are by credit card, 25% by debit and 15% with cash, then you’ll know that 60% of that item’s cost incurs fees that you’re paying.

Let’s say you have an item that costs you $2 to make and you sell for $10. That cost includes raw materials, labor, benefits, insurance, your lease – all your overhead except your credit card fees. If your fees are $0.30 plus 2.5%, then you need to add $0.55 to your cost, bringing it up to $2.55.

Using that numbers in our this example, let’s also say you sell 1000 items per month:

  • 600 are by credit card
  • 250 are by debit card
  • 150 are with cash

Instead of your profit being $8000, you need to subtract that $0.55 per item of the 600 (60%) by credit card, which is $341. Your profit then goes down to $7659. Sure, that’s right around 5% but you can see how that can add up. That $341 times 12 months is $4,092. It might be time to raise the price of that item by 5% if you can still stay competitive with it.

Consider Buying Credit Card Machines Instead of Leasing Them

Credit card terminalSure, right when you got set up, leasing sounded like a good idea but now it’s time to look back and evaluate your real costs. In most cases, it’s cheaper in the long run to buy the machines yourself.

Today, you’re seeing more POS (point of sale) systems using iPads/tablets. This equipment is cheaper than other kinds of interfaces of years past.

With this new technology more options are available because these devices have larger screens. For instance, you can program them to first ask the customer to use their debit card (ask for their PIN), versus giving them the choice to use either. When you process more payments via debit, you can save a lot of money on processing fees.

Also, if you run a service based business, you can program a tablet type of POS to ask the customer if they want to add a tip with some pre-programmed tip amounts.

Negotiate a Better Rate

You can do this with your current payment processor or with a new processor. Yes, those annoying phone calls and salespeople that stop by asking about your rates can actually save you some money. In most cases, they can beat the rate you’re paying now. It’s fun to pit these companies against each other for your business because you always win.

This is easily the best way to save money on processing rates, charges and fees. This business is very competitive, so don’t turn those salespeople away. Take a few minutes with them and see what they can do. They usually just need to see your last statement. That’s really about all the info they need to see if they can compete or not. If they can’t, they’ll leave you alone. If they can, see how much they can save you.

When you do switch to a new processor or start setting up a credit card processing account, never accept the setup fees they throw at you. Ask for them to be cut in half and they can usually do that or give you some kind of break. Remember, everything’s negotiable, right? You can always ask.

How Much Will You Save?

ATM keypadIf you just take a little time to review your situation, a few, small changes can save you some pretty big money in a few months or even a year. Do this kind of evaluation at least yearly to see where you can save a little here and a little there.

Oh, and the very best way to save is to not accept credit cards. Put an ATM in the lobby and just accept cash. Some businesses can get away with this. Maybe that’s something to look into. You can always try it for a while and see what happens or ask your patrons if they would be open to that.

Let us know your best ways of saving on card processing here in the comments section below.


Please enter your comment!
Please enter your name here