Small Business Tips for Credit Card Processing

When you’re running a small business, every penny counts. Understanding some basic ways to get the most for your money will help your business thrive. Here, we discuss several ways to save money that you might not have thought of.

Customer purchasing online using credit card
photo credit: Cup of Couple / Pexels

How to Save Money on Credit Card Processing in Your Small Business

The credit card processing for small business industry can be expensive, regardless of who your service provider is, but it’s a necessary function to help your business grow. Many small business owners aren’t aware that you can negotiate your rates and choose from different pricing models that are best for you.

Let’s take a look at your options.

Understand Your Business

The first step in saving money on credit card processing is to understand your business. This includes the types of transactions that you process, the volume of transactions on a monthly basis, and the types of cards your customers are using. All of these pieces of information can help you make better choices when it comes to processing.

The second item to consider is the type of equipment you have or need. This will vary greatly based on your business model. If you have a brick-and-mortar store, you likely need a lot more hardware than if you own an eCommerce business. Note: try to purchase the equipment outright, rather than leasing. It’s almost always cheaper.

Last but not least, you need fraud protection. This is a non-negotiable piece of the puzzle that you need to budget for. If you’re going to be collecting credit card information from customers, you have the responsibility of protecting that information.

Businessman in a fancy coffee shop

Know What Fees Can Be Negotiated

Credit card processing includes a complex series of fees that are charged by different entities. Some are negotiable and some are not. If you know the difference between them, you will be better suited to negotiate for your business.

1. Interchange and assessment fees are non-negotiable

Interchange fees are per-transaction fees charged by the credit card network and split between the network and the card-issuing bank. Assessment fees are based on your total monthly sales and 100% of these fees are paid to the credit card networks.

2. Markup fees are negotiable

These are the fees charged by your service provider for their services. Since the service provider doesn’t receive any portion of the interchange or assessment fees, they will charge a markup so they can make money. This is their main source of income.

3. Monthly fees are negotiable

Many service providers also charge a monthly account or maintenance fee. This fee can often be negotiated, based on your good standing with the service provider and the volume of transactions you process each month.

Tiered pricing strategy

Understand the Different Pricing Structures

This is one of the most complex concepts in the card processing world, but is vital to your business. If you want to save money on your processing, it’s important to know the difference between the pricing models. Not all models are created alike and different ones are better for different types of businesses.

1. Interchange Plus Pricing

This is considered to be a great option for the majority of small businesses who need card processing services. In this model, the service provider will pass the interchange fee on to the merchant at-cost. They will then charge their markup fees at a fixed rate.

This model makes it easy to plan for your processing costs because of the fixed markup rate. The confusing part about this plan is the interchange fee. Since the provider is passing it to you at-cost, you’ll have to navigate all the different prices for the various card-issuing banks and even the type of cards.

Since 2010, in general debit cards have much lower fees than credit, but other pricing models were not affected as much as interchange plus.

2. Tiered Pricing

Tiered pricing includes what is often a convoluted structure that can be difficult to understand. Transactions are grouped into “tiers” and charged according to their tier. These tiers are typically called qualified, mid-qualified and non-qualified. Each category is charged a different markup and interchange fee based on the category.

Different service providers categorize transactions differently, so it’s really hard to get a side-by-side comparison in this model. Service providers often clump more transactions into the non-qualified tier so they can charge higher fees. Many merchants are unprepared for the stark difference in fees between the categories.

3. Flat Rate Pricing

This model is by far the easiest to understand and plan for. It can make life much easier for the merchant because you can plan and budget for your processing expenses each month. However, not all service providers are to make this a simple process.

Some will charge a flat fee for all transactions, while others will charge a flat fee for credit cards, another for debit cards, and so-on. This also makes it difficult to compare and contrast providers when shopping for services. Providers also tend to charge higher-than-average rates because they need to cover their own costs on transactions that would cost more in a different pricing model.

Credit card payment processing at the till

Shop Around

When all is said and done, it’s important to shop around for your services. Be sure to avoid high-pressure sales situations, sales gimmicks, and loss leaders. Those are sure signs of a service provider who does not have your best interest in mind. You also want to avoid signing a contract and get a provider who offers a 30-day out instead.

Although it can be tedious to dig into all these different pricing models and fee structures, it’s a great way to make sure you’re getting the best deal. Get quotes from multiple providers and sift through everything they have to offer. You want a provider who is secure, offers great customer service and has really good rates that will help you be successful.


Payment processing is one of the most important aspects of your business. Be sure to give it the time and attention it deserves to make you successful long-term. All of the activities discussed here will help you get the best rates and find the best provider for your business.