Lowering processing costs is not all about the rates

For many businesses that want to decrease costs in credit card processing, the best alternative often appears to be negotiating their "rate". While negotiating rates is an important first step in decreasing costs, there are other factors in processing costs that are often more important than the rate structure.

Simply asking your current processor to lower their rates or getting several bids to try and lower costs is an inadequate strategy for truly minimizing these costs. The manner in which transactions are categorized and setting up the base rate parameters for each business can be far more critical to the cost than the "rate" that has been negotiated.

Financial Mitigation Services analyzes thousands of processing statements a year and we are experts in devising strategies for businesses to decrease their costs by working collaboratively with the current provider. We have worked with hundreds of businesses that have been convinced they have negotiated the lowest possible rates for themselves, only to find that we can achieve substantial savings for them by working with their current processor.

Processors, either by by lack of knowledge or purposefully, often set up their clients incorrectly and the result is excess fees and substantially higher costs than is necessary to process credit cards. Truly minimizing processing costs is not difficult, but it requires a specialized expertise in this area and a monthly focus on your transactions.

As a small example among hundreds of possible scenarios, a common mistake we often see is a business that has a great deal of card not present transactions that should be set up as a card not present merchant with a base rate from Visa of 1.85%. Many times, the business is set up incorrectly as a Card Present merchant, which has a base rate of 1.54%. It appears on the quote that you have just decreased your rate by 17%. In reality, all the downgraded transactions will be charged at a higher rate as well as have stricter parameters to get the transaction to qualify for the lower rate. This "mistake" almost always costs the business far more while giving the illusion of a lower cost.

The above example, along with hundreds of other possible scenarios, is why so many businesses change processing companies with the promise of decreasing their costs only to find later that they have not decreased at all. Alot of effort to change processors is put in by the business to chase a lower cost and the benefit is never realized.

There are currently over 300 unique Interchange cost categories that businesses can be charged for accepting a credit or debit card, each with its own unique set of parameters. Simply negotiating a "great rate" with your processor is only a small part of the puzzle when it comes to decreasing your costs in this expense category for your business.