Merchant services are offered for an assortment of fees. Some of these fees are charged intermittently, while others are charged per item basis or on a percentage basis. Usually the issuing banks decide a number of fees, while the rest of them are actually fixed by the credit card firms.
Once you avail merchant account service, you need to pay multiple service charges. Some of the typical fees you need to pay depending on the services you are seeking include Address Verification Fee, Chargeback Fee, Cancellation Fee, Monthly Minimum, Gateway Fee, Transaction Fee and Statement Fee. Your aim should be to reduce merchant service costs and you must use the following tips to do that.
Keep Checking and Memorizing the Contract Expiry Date
Most people are not aware of the fact as to when their contracts are going to expire. Before they are able to track the expiry date, often the contract is renewed automatically for two more years at exorbitant costs that are certainly more than the prevalent market rates elsewhere. If at all you opt for early termination, the actual savings of switching would in all probability cover the early termination charges. So try to remember the expiry date and remember to act at once without losing any time.
Always Browse Through a Comparison Site
Shopping around is the best policy under the circumstances. Always consult a comparison site that offers instant online quotes and other discount offers. You must compare at first, credit card percentage fees and thereafter, you need to keep track of comparative start-up fee, transaction fee, monthly minimum fee, cancellation fee or even the terminal lease fee. It is not easy to compare on all points as there could be around 30 different fees. For perfect solution, you just need to calculate and understand the Effective Rate. Effective Rate can be calculated as a percent of credit card sales.
Research Is Always Welcome
You must stay abreast with the current market rates if you wish to negotiate and reduce your merchant service costs. You could talk to your colleagues and find out the amount they are shelling out. You could opt for bulk buying. You could talk to FSB if they can come up with a highly competitive deal. Beware of sales people. They have a variety of tariffs to pick from and most of these people would charge very high as they are always looking for their own profit.
Knowing Your Interchange Rates Seems to Help
This is actually the rate that Visa and MasterCard charge on all card processors. The differential rates should be the same. Card processors tend to charge more but you should always knock them off.
Always Check Customer Reviews
Once you have shortlisted the companies, you must remember to do a quick Google Search and go through the customer reviews to keep yourself updated.
Keep Track of Your Charges
You must sit down with past six months’ bank statements and see if there are any discrepancies and challenge them if any. Look for any unexplained charge back fees or downgrade fees. You must try and understand why these fees have been charged.
Separating Your Terminal Costs Seems to Help
You have the option of hiring your card terminals elsewhere at less cost. But you must make it a point to sync renewal date with the exact card processing date of renewal.
Controlling Merchant Card Fees is the Best Policy
Big firms like Amazon have made attempts to reduce merchant fees by holding off payments from your account till after you’ve received the item. What this does is dramatically lowers the risk for a card processor. This is important as the card processor is to be held liable if the company falls into any financial issues in the time between when the order is placed and when it is delivered. This risk is mitigated by charging less for longer settlements, and more for the expedient, quick ones.
Benchmark on a Regular Basis and Check Annual Increases
Even experts in the industry are taken aback by tremendous increases in annual fees. This is a phenomenon which occurs all the time, but it is avoidable. You can contest these increases by getting quotes from other sources and also benchmarking costs. Benchmarking is vital, as for all rapidly growing businesses, benchmarking would lead to substantially reduced fees on merchant cards.
Author Bio: Matthias Huddleston is a blogger and an expert financial consultant for a private finance agency. Currently he is writing blogs on ways to reduce merchant service costs.