Advice for Small Business Owners on Card Processing Fees

If you are a small business owner, you most likely are already feeling the sting of credit card processing fees.  These fees have made it difficult for many small business owners to maintain their already thin profit margins.  If you fall into this category, you most likely dread April for more than just being tax time because it is also the time of the year when the credit card companies look at making adjustments to their processing fees.  As you might expect, these “adjustments” pretty much involve raising them to a higher level than they were the previous year.

Unfortunately, these increased processing fees tend to have a snowball effect.  When these card processing fees are increased, credit card processors also increase their fees.  While they are certainly justified in raising their fees in accordance with the increase passed down from the credit card companies, many use these increases as an excuse to increase their fees beyond what is passed down by the credit card company.

As a small business owner, all of these small fee increases add up substantially over time.  Fortunately, we can offer a small bit of advice to help guard your profits against unscrupulous credit card processors and other middlemen trying to get a piece of your pie.

First of all, you need to be aware of the current interchange rates being charged by the credit card companies.  Take the time to stop by the websites of Visa and MasterCard in order to research what the actual rates are.  This way, you know precisely what the processor is being asked to pay for your transactions.  Armed with this information, you can confront a processor that is charging an excessive rate.

At the same time, you need to watch out for processors that offer rates that seem too good to be true.  Sometimes, processors offer rates that are at or even below the current interchange rate.  These special rates, however, will only be applied toward “qualified” transactions that are determined by the processor.  Those transactions that qualify for this special rate may not be helpful to you or your business in the slightest.

Furthermore, be certain to read your billing statement thoroughly.  A reputable processor will clearly show the rates being charged for each type of transaction and these rates will be based on the interchange rates as established by MasterCard and Visa.  If your fees are grouped into rate tiers, you are likely being charged more than you should be.

If you have reason to believe that you are being taken advantage of by your credit card processor, don’t hesitate to cancel your contract.  Even if there is a penalty fee for canceling early, you will most likely save more money in the long run than you will lose by paying the penalty.

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