There are various factors that go into the rates your business is charged for accepting credit card payments. Many of these factors are beyond your control, but there are several best practices you can follow to make sure you’re not paying more than necessary. Here are four tips to do just that.
1. Swipe, Insert, or Tap the Card Whenever the Card is Present
When you manually enter a credit card number, or accept a credit card online, the interchange rates for your payments go up because there is a greater risk of fraud. To avoid these higher rates, make sure you actually swipe, insert, or tap the card whenever it’s present for a transaction. This will ensure you’re getting the “qualified” or lowest tier rate available through your payment processor.
2. Encourage Customers to Use the Debit Option When Paying with Debit-Cards
Debit cards are linked to a customer’s checking account and can be run as a debit transaction or a credit transaction. Debit transactions have significantly lower interchange rates, so if you are on an interchange-plus or tiered pricing plan with your payment processor (as opposed to a fixed-rate plan), then encouraging your customers to use the debit option will reduce the fees you have to pay.
3. Include Verification Information When Manually Entering Card Numbers
There are certain scenarios, such as when taking phone orders, where you simply won’t have a credit card present to make a transaction. In these cases, it’s crucial that you manually enter not only the credit card number, but also the supplemental information your POS system or payment terminal requests. This information can vary, but typically includes the credit card expiration date and CVV number, as well as the cardholder’s zip code and address.
Doing this will reduce the risk of fraud and chargebacks, both of which hit you in the pocket book. Additionally, some payment processors will flat out decline a card if all the information is not entered.
4. Settle Your Payments Every Day
When a credit card transaction is approved by your payment processor, it is done so under the conditions that the payment is processed that same business day. That means you need to settle (aka “batch out”) your transactions daily. If you wait until the next day, your payment processor will likely downgrade those transactions and charge you a higher rate. Wait too long, and there’s a good chance the processor will go so far as to decline the transactions altogether since they have become too risky.
If you operate a restaurant or other type of business that accepts tips with payments, make sure to accurately enter the tip amounts for each transaction prior to batching out, as well.
Did you know that SpotOn’s Preferred Payment Processing Rate Program includes purchases made with rewards cards? Most payment processors downgrade reward cards to a non-qualifying category and charge your business an additional 1% to 2%. Learn more about how SpotOn can save you money on payment processing with our Preferred Rate Program or custom processing rates optimized for your business.