How to Avoid Overpaying for Credit Card Processing

You’ve done all your research and finally picked a credit card processor for your company. The start-up fees are paid, you’ve budgeted for the monthly fees, and the transaction fees are reasonable. Your job is to make the sale. The credit card processor does all the rest, and before you know it, the money is in your account. Like the saying goes: “Set it and forget it.”


There are two key reasons why business owners regularly overpay for credit card processing. Both stem from the “set it and forget it” mentality that plagues busy merchants: 1) Failure to read your credit card statement, and 2) Failure to regularly compare credit card processing rates.

How do you read your credit card processor’s statement?

That’s not an easy question to answer, especially since credit card processors have different pricing structures and present them in their own statement format. There are lots of articles available on the net — and a host of YouTube videos — that cover the subject of how to read a credit card processing statement. The authors all seem to agree that in order to keep your processing costs down, you need to know where to find your base costs and how much you pay in markups each month. And you need to monitor that information on every monthly statement.

Your base cost shouldn’t change month-to-month. This combination of interchange rates (the percentage of the volume for each credit card transaction set by the issuing bank) and assessment fees (the flat transaction fee for each transaction set by Visa/MasterCard) are the same for all processors.

But here’s where things get complicated. Your monthly processor cost — the fees your processing company charges for their services — fluctuates every month for a variety of reasons. Obviously, sales volume makes the most difference in your costs. But the type of credit card transaction plays a part as well. For example, when your customer uses a rewards card, you may be charged a higher interchange fee. Secure on-line transactions and debit card charges may actually have a lower fee schedule. And each month, depending on a number of issues, your transactions are categorized as qualified, mid-qualified and non-qualified, all with a different rate. All these tiered rates can be very confusing at first, but once you learn how to interpret your statement, you can get a clearer picture of how your unique sales affect your credit card processing costs.

Armed with this detailed information, you should make a habit of getting quotes from other credit card processing companies. If your current rates don’t compare with the new quotes, it may be time to switch credit card processors. Or call your present company and ask a representative to check and see if fee schedules have changed since you signed your contract. Even a small down tick in a percentage rate could make a big difference to your monthly processing costs.

Of course, you could also switch to Transparent credit card processing and avoid the hidden and changing fees entirely.

However, if you insist on sticking with your current payment processor — or, more likely, if your current payment processor has you under contract and you don’t want to pay the cancelation fee — regular reviews of your credit card payment processing statement can help you identify fees that could be lowered or even eliminated all together. Combine this information with regular comparison-shopping among credit card processing companies to determine if the time is right to make a money-saving switch.