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Does your business accept credit cards? Are you paying hefty Merchant Service Fees to process your credit cards? And do you know that a significant portion of those fees can easily be eliminated?

Merchant service fees are a business expense that all companies incur, either through their aggregator, or their payment processor, whether from a credit/debit card charge or an ACH transfer.

For example, if you earn $10,000 in sales, you might pay $300 to accept your customers’ payment by credit card! As a merchant, you lose some part of your profit toward service fees. So how can you save on these merchant service fees?

Well, there are ways to save on merchant service fees. So read further, and let’s find out!

Types of Payment Processing Costs Involved

There are many different fees associated with accepting credit cards, from the interchange fee charged by Visa and MasterCard to the processing fee applied by your credit card processing company. Let’s break down the credit card processing fees and see all the related costs:

⦁ Interchange Fees

The interchange fee is what’s paid to the issuing bank. It’s what every credit card payment network, such as Visa and MasterCard, charges per transaction for the processing of a credit card payment of 0.05% or 3.15%. You can avoid this by using companies that offer interchange optimization services and dual pricing for B2B transactions.

⦁ Assessment Fees

Dues & Assessments are set by the card brands such as Visa and MasterCard. These fees are not negotiable and are usually about 0.20% per transaction.

⦁ Authorization fee

When a transaction is completed, the payment processor charges the merchant. Even if the card is declined or a product is returned, the merchant is still billed. In addition to monthly charges, some payment processors charge for technical support and cancellation of accounts as well.

⦁ Processor Fees

Processor service fees are a cost for the merchant payment processing company to run its services. The rate of these fees can range anywhere from 0.05%-1.5% per transaction, but this fee will not be uniform across all processors. For example, some processors charge a per-item fee, while others might bundle them all into one monthly fee.

Here’s how Credit Card Processing Fees are Packaged:

Save Merchant Fee with Interchange Optimization

Most B2B and B2G merchants in the market still don’t know that they can qualify for lower interchange rates; after providing additional detail of the transactions. But since they only know how to input the most basic information, they remain untouched by this benefit.

Opting for Interchange optimization will qualify you, as a merchant, for the lowest rate for every transaction using the best payment processing practices.

No doubt you could benefit most from interchange optimization only if you are a B2B or B2G merchant. And if you are a B2B to B2G merchant, you have to pay a lower rate when the card is swiped.

“What else! Needs to be done!”

To involve interchange optimization to obtain the best rate, you need to provide extra details about each transaction of your B2B and B2G purchases. Due to this, these businesses mostly accept payment using purchasing cards that capture Level 2 and Level 3 data at the point of sale.

The payment processing of Level 2 and Level 3 provides additional data about the transaction, like customer codes, tax IDs, and PO numbers. Doing so will help optimize the merchant’s interchange rates and reward merchants with extra cost savings for providing additional transaction data.

“The optimization process is not as easy as it sounds!”

Nevertheless, this process is complicated and time-consuming, so you need a merchant account provider. To help you decode transactions that can be charged at the lower Level 2 or Level 3 rates. ribbonPay offers an interchange optimization tool that automatically analyzes all your business transactions and determines which qualifies for discounts.

Our software allows the merchant to get additional information about its customers. Then it automatically populates Level 2 and 3 data to reduce the number of interchange fees they are charged on transactions. It worked great for their clients by getting dollars in savings.

How Can B2B Merchant Save with Dual Pricing?

If you are collecting payment via invoicing or a hosted payment page, You might be thinking about “What is dual pricing?”

By adopting a dual pricing model, you offer your clients two options to pay: your normal price for ACH and a slightly higher price for a Card to offset all your fees. Your business receives the full cash value of each product sold regardless of the method of payment chosen by the client. And that makes this model beneficial for business owners.
For its implementation, a business must have three things to run an Honest, True, and Transparent Dual pricing program:

⦁ A merchant service provider offering a flat rate percentage that knows the cost for each item to price it correctly.

⦁ Must take time and care to provide customer friendly experience to your valued customers. For this, transparency must be there to let them know how much the product costs when they choose to buy it.

⦁ An efficient POS system supports a dual pricing model with ACH and Card prices for every product. Also, effective in generating accurate reporting to support business operations.

All in all, adopting the dual pricing model will not only improve customer experience but also help to save on merchant fees.

Wrapping Up

If you’re looking for a way to save money on merchant service fees, ribbonPay may be just the solution you need. Their best-in-class Interchange Optimization tool helps you as a merchant to save on service fees.

In addition, all their payment terminals and POS systems are free, and they all have built-in “Dual Pricing” and offer custom pricing features. All in all, with its many benefits, competitive rates, and ease of use, ribbonPay would be worth exploring if you’re looking for ways to reduce your merchant service fees.