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Does anyone have any tips on controlling credit card fees?

Nelda Alston's Profile

My goal this year is to reduce credit card fees. There are so many different type of cards & various fees associated with them, it is hard to tell if I am getting a good rate fee from my processor. The problem in our association is our vendors using cards which earn them points (which we are paying for those points by higher rates). I have been speaking to several processors, but really get confused on all the cards & then there is the trust factor when speaking to these processors.


Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

I completely understand your frustration. The bank we just switched to offered to quote ours and put us into something called Interchange Plus, which has the most competitive rates I have seen in a long time. Our fees have decreased by 27% and we are busier than LY. See if you can find a local bank that processes them in house. They can process them cheaper because there isn't a third party involved.

Also see if you can get a report to show you manual entry vs swipe. They charge higher fees for manual entry.

Stephen Glenn
Title: Controller
Company: Pierre Frey, Inc.
(Controller, Pierre Frey, Inc.) |

Credit card fees are not easy to understand, many of the smaller processors will not make the effort to thoroughly explain or reveal their pricing structure, but can be done by putting in the time to analyze your current statement.

The starting point of any comparison between merchant services providers and then negotiation is to understand what you are doing now. You can't control what type of cards your customers use, i.e. rewards cards, purchasing cards, business levels 2 or 3. What is important to know is your type of business, how cards are charged (retail vs MOTO), your annual volume, and number of transactions. Can you change your process to obtain better rates? As Christie mentioned it is much cheaper to swipe a card than to manually process it. The discount rate is dependent on how your account is set up from the beginning, what type of category you are placed into. If you process manually, are you obtaining data needed for level 2 or 3 cards?

We had a decent discount rate with our previous provider, but ended up paying much more due to the high level of interchange fees charged on rewards cards, business cards, and international cards. Our new bank placed us into a category that caps the non-qualified discount fees, substantially reducing our fees even though the qualified discount rate stayed the same. I negotiated a reduced non-qualified discount rate, and the reduction or elimination of the smaller nuisance fees, such as monthly service fees, authorization and batch fees. Fees directly assessed by MC and Visa, such as for international cards (.4%) and AVS fees, were not negotiable.

Jaime Campbell
Title: Chief Financial Officer
Company: Tier One Services, LLC
(Chief Financial Officer, Tier One Services, LLC) |

I know someone in the industry - a few few people, actually, but this one is head and shoulders above the rest. Classy, relationship-based, with the best interest of the client at heart. His first step is to do a free analysis to see how his programs stack up against what you've got.

He has told prospective clients that they're better off with the program they have even though in many cases, others save money AND experience a higher level of service when they switch.

Message me privately if you'd like his contact info.

Ernie Humphrey CTP
Title: VP, Thought Leadership
Company: Stampli
LinkedIn Profile
(VP, Thought Leadership, Stampli) |

Here is a link to presentation on Proformative that addresses this topic, . I can also connect you with the presentation author if you like, just send me an e-mail to Ernieat360thoughtleadership [dot] com

Joe Call
Title: CFO
Company: Herrick Industrial Supply
(CFO, Herrick Industrial Supply) |

I have tried several processors over the years. I found that most of the time they don't deliver what was promised. I have very competitive rates now, but I had to give up getting my deposit in 24 hours. Another thing to look at is if they do level III processing. This gets the lowest interchange rates and has saved us a lot of money. We are using a virtual terminal on steroids that helps us get the level III processing almost all the time. The company providing this program is PayTrace.

Eddie Price
Title: CFO
Company: Shoe Sensation
(CFO, Shoe Sensation) |

Just went thru this process and it was quite the learning experience. it is difficult, it not impossible to control the interchange side of the cost, which as you noted varies greatly across regulated vs nonregulated cards and type of points card the customer is using. be sure your solution includes the ability to take pinpad debit cards. while the durbin act helped, it did not go far enough to control this oligopoly of interchange providers. you have to focus strongly on the processing side, we locked down 3 bps on the processing and absolutely no other processing fees. We use Vantiv, but I have another suggestion that you should also consider. and get several quotes, you have to bid the companies against each other.

Ty Hardison
Title: VP Strategy & Development
Company: Vantage Card Services, Inc.
(VP Strategy & Development, Vantage Card Services, Inc.) |

Benchmark your processing cost against others in your same industry and size at

Kevin Bailey
Title: President
Company: Logical Processing Solutions
(President, Logical Processing Solutions) |

I would contact a few different processors and get a quote for actual Interchange Plus Pricing.That means you will be charged the actual pass thru fees by the card companies and as a separate line item the processor's fee. A good processor will quote you their processing fee of about .10% to .25% of your volume and a authorization fee of about $0.10 to $0.15 per transaction. A monthly fee of about $10.00-$15.00 and a annual fee fee to cover PCI and Regulatory cost should not be greater than $60.00. Also make sure they cross out any early terminal fees. You should be able to leave anytime if you are not satisfied with their service. They should be willing to sit down and go over the various options regarding the best way to process the transactions so that you pay the correct Interchange rates for the different type of cards that you accept. ( Level III for large ticket transactions as an example) .
Unfortunately sometimes the local bank's processor isn't the best answer because they typically use an outside company and the sale representative is paid on a straight commission to just get you to sign. If you do call your local bank insist that the bank personnel join the call so they can also see how the sale representative acts. Last piece of advise a good processor will give you plenty of references in your area.

Steve Kahn
Title: Controller
Company: Carolina Lumber & Supply Co.
(Controller, Carolina Lumber & Supply Co.) |

a few points:
1) while I like the convenience and hopefully increased traffic we get from accepting credit card payments, I hate the face that it is the only business transaction I enter into where I don't know the cost of the transaction in advance -- the fee depends solely on what features the customer's card has
2) the biggest part of the fees are the charges from the credit card companies them selves rather than your processor (the interchange fees) and there isn't much to be done about those rates; so the best ways to save are to follow their rules - process a debit card as a debit card when the rate is more favorable (usually over $40); when keying in card information, include all the information requested (address zip etc.)
3) get the best rate you can on the small part of the processing -- the processor add on fees -- several are out there and hungry, so don't be afraid to compare rates. Just have a packet of a couple of months activity, share it with a few candidates and see who can do what -- be sure to include your current provider in the mix, they may come back with a savings alternative without the hassle of changing processor.
4) one other item that may have some savings is to do split dial with American Express, so AMEX transactions go directly to AMEX and you don't get a surcharge from the processor.

Michael Sipos
Title: Enterprise Account Executive
Company: Trintech
LinkedIn Profile
(Enterprise Account Executive, Trintech) |

The previous comments are for the most part on point and really surround two issues, neither of which most processors willingly discuss because it can reduce their margins.

First, is interchange management - understanding how to fully capture the information necessary to make each transaction qualify for the lowest possible rate. You cannot always control the method of card presentment - i.e. card present, web, telephone, etc., but you do have control in capturing the most information to qualify for lower rates. Credit card transactions are priced based upon risk so the more information you capture and pass through the system, the lower your rate. There are 3 levels of capturing information, with level 3 offering the lowest rates. While there are additional upfront software and related costs to capture level 3 data, the rates are typically significantly lower more than offsetting that cost.

Second, are processor specific fees. Processors are the ones who provide the connection to the networks (Visa/MC/AMEX/Discover) and most of their profit comes their fees outside of interchange. The key is to understand your company's typical transaction levels (number of transactions, average transaction amount, high-dollar transactions, etc.), then analyzing the average "all in" cost per transaction of processor fees (statement fees, communication fees, reporting fees, etc.).

I ran the merchant processing for a regional bank so this comes from my experience in that and previous roles before leaving banking. I hope this helps and feel free to reach out to me directly if you would like additional information.

Terry M. Cooney
Title: CFO
Company: New West Oil Company LLC
(CFO, New West Oil Company LLC) |

Go to For a very reasonable fee, they will accept bids from processors and monitor fees monthly to assure that fees remain as proposed. They also have a very robust, virtual terminal that helps assure that Level II and Level II data are transmitted for maximum discounts. This is outsourcing that makes sense - no long-term contract.

David Daitchman
Title: Financial Analyst Consultant
Company: Integrated DNA Technologies, Inc.
(Financial Analyst Consultant , Integrated DNA Technologies, Inc. ) |

You can't control the incentives a customer has on his/her credit card, so when you sign a merchant agreement, you will get hit with excessive fees. You can supply more data, thus qualifying for level 3 processing - which is supposed to be a lower default risk and thus a lower fee structure.

Visa, Mastercard and Discover set their own rates, so their is no negotiation. I saw many gas stations and mechanics who stopped accepting Discover Card for payments because the incentives sometimes generated 12% fees. It was simply too expensive to do business and accept Discover credit card payments.

The banks that issue you a merchant account don't want to negotiate, so basically the only times you have leverage is when you are comparing offers, or when you are shopping the market.

My company will do about $36 Million in charges in 2014, almost all via website payments. Over 99% of payments to my company come from hospitals, Universities, and research labs. We are talking high quality customers, with virtually zero default rates on payments and virtually zero fraud.

I have tried to get some cost cuts for this , but simply put, the industry has a monopoly and knows it. The only real negotiations occur when you shop the market and play various bidders against each other.

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