How to Negotiate Lower Costs When Signing up For a Merchant Account

There are several different factors that decide the pricing structure of a merchant account. Knowing these factors beforehand will lead to a better pricing structure for your business and increase your bottom line. Make sure you know these factors before signing a merchant contract, as it could potentially save you thousands of dollars a year in processing costs.

Know how you’ll be taking cards. Are you going to be taking cards over the phone, i.e. “keying” cards, or will you mostly be swiping cards? Although it seems self explanatory, this could potentially save you thousands of dollars. There are two ways of being set up as a merchant, keyed or swiped. If a businesses does not specify and is set up as a swiped account, but find they are keying in most their transactions, the rates you see on your statement are not going to reflect the rates you’ve been quoted. Here’s why: Swiped accounts charge a surcharge for keyed in transactions. So, even though the card you accepted might be a “qualified” card, it will automatically go to “non-qualified” if keyed in.

Know what cards you’ll be taking. While this is a bit tougher to determine than knowing if you’ll mostly swipe cards or key them, it might be equally as important. Business should at least have a rough idea of the types of cards they’ll be taking the most, i.e. debit and credit cards or corporate and government cards. Some might not know there are two ways of being set up with a pricing structure, one is a tiered structure the other is interchange plus. A tiered structure would be fine for businesses that’ll mostly deal with regular consumer debit and credit cards, but a surcharge will be added if the card is a corporate or government card. So, businesses that plan on accepting a lot corporate or government cards should almost always go with an interchange plus pricing structure instead.

Know how often you’ll need to accept cards. Merchant contracts usually last three years, some even have an early termination fee. There are also monthly fees associated with merchant accounts, such as a monthly service fee and sometimes a monthly minimum. If your business is seasonal, there will almost always be a different, more expensive pricing structure. Knowing how often you’ll take cards could potentially save you thousands. For example, if your business only takes cards from a small handful of clients maybe twice a month, it would probably be beneficial to go with a merchant service provider that charges a higher rate and no monthly fees. If you plan on taking cards on a daily basis, it would make sense to go with a merchant service provider that charges a monthly fee but has much lower rates.