Merchant Services Expense Reduction Strategies for 2018

As we approach the end of the year, we know many companies are once again looking to reduce their merchant services expenses. Below we have provided three different merchant account expense reduction strategies that will help you get started on the right foot in 2018.

Expense Reduction Strategy #1 – Examine Merchant Service Fees

First and foremost, make sure you have someone on your team who understands how to read a merchant account statement. With so many entities taking a profit from your merchant account, it’s hard to cipher through itemized lines, percentages, and more. To understand your merchant account statement, you have to know who is taking a cut from your merchant account.

Issuing Banks

The issuing banks are part of the Visa & MasterCard BankCard Associations. They issue the credit cards to the cardholder. A majority of the fees you pay to accept a credit card payment go to the Issuing Bank.

Networks

Networks transmit authorisations and funds for Visa & MasterCard. AmEx, Discover, Diner, & JCB are not part of the Member Banks thus they have their own networks and fees.

Payment Platform

This is the process in which a Terminal Machine or Virtual Terminal Gateway can access the networks to receive Authorization Codes so Transactions are approved or rejected.

Acquiring Banks

The acquiring bank is the financial institution that processes credit card payments on behalf of a merchant. They assume the risk associated with each transaction, being held liable for refunding customers if the business is not able to do so.

Independent Sales Organizations (ISO)

An ISO represents the Acquiring Bank. They sell the access to process credit card payments. An ISO CANNOT offer credit card processing without the Acquiring Bank, but the Acquiring Bank CAN without and ISO.

With so many groups receiving a portion of your fees, it can be very hard to know which fees are going where, which fees are mandatory, and which fees can be eliminated. Get to know your merchant account statement. Then you can figure out who to talk to about reducing those fees where possible.

Expense Reduction Strategy #2 – Cut Unnecessary Spending

Once you understand the in’s and out’s of the merchant account statement, you can begin eliminating unnecessary fees, cutting the cost of late fees or human error, and negotiating fair and reasonable rates. In your most recent merchant account statement look for the following fees:

  • Statement Fees
  • Monthly Funding Fees
  • Monthly Service Fees
  • PCI Compliant Fee
  • Monthly Gross Pay Fee (American Express Only)

Every one of these fees can be either reduced or completely eliminated from your merchant statement. With an audit from Verisave, you’ll get a clear idea of exactly how much you can save in processor fees, interchange rates, and even American Express fees.

Expense Reduction Strategy #3 – Shop Processors For The Lowest Rates

Your company is charged a fixed percentage to handle merchant service fees. One of our healthcare company clients had over a 3% processor fee per credit card transaction. Verisave’s team of merchant services experts were able to reduce their processor fees down to a manageable 1.94%.

Ask Your Current Processor For A Rate Review

Get your processor on the phone and have a conversation about your current rate. Often times, this can lead to a small percentage of savings if they are willing to shave a few points.

Send Out A Request For Proposal

Sending out an RFP to multiple processing companies (including your current processor) will tell you what current rates are being offered. It may even surprise you to know that you’re currently overpaying.

These two strategies can be effective but do NOT guarantee the lowest rates since all bids will be based on your current rates. At Verisave, we have worked with all the platforms that processors use and know the limitation and strengths of each platform which can directly affect savings. This work experience also lends great insight to current industry standards. Knowing the processor’s cost structure helps Verisave to negotiate lower rates for our clients that work for the processor as well.

Nevertheless, Verisave can save clients an average of 25-35% in merchant services and fees without having to switch current processors.

Businesses Will Reduce Expenses With Verisave

Depending on the strategies your company implements this upcoming year, you can reduce some of your merchant service expenses on your own. On average, Verisave has seen that companies manage to reduce their fees by 3% – 5%. However, by choosing to work with Verisave, our clients’ have been able to save on average 25% – 35%.

One company Verisave worked with was a medical device company. They had managed to work out an effective processor rate of 2.85%, but there was still room for improvement. Within just a few days of work, Verisave was able to identify areas where a 30% reduction in fee expenditure could be implemented. Over 3 weeks time, we implemented those savings plans which allow the medical device company to enjoy those savings to this day.

If your company would like to start 2018 off on a better financial footing, Verisave is ready to help. Our merchant account audit can help your company reduce their merchant service expenses and help your company reach their financial goals.

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