If you accept card payments, then you know all too well the need to manage your merchant account and the card processing fees being billed. While some merchants "set it and forget it" never opening a merchant statement, others tend to believe every offer that crosses there desk - neither of which is your best strategy.
A recent article from Internet Retailer profiled baby product company Uppababy. The company started in 2006 to sell strollers and is now present in 12 countries, selling multiple versions of strollers and car seats. The company is partnered with several major retailers including Amazon and Bed, Bath and Beyond, as well as a number of smaller boutique retailers.
Their wholesale business transactions are mostly conducted in a "card-not-present" sales environment and they were paying high non-qualified surcharges. According to Uppababy controller Brian Murray, this is something that the company was aware of but was never an expert on. This led to the business being charged multiple different fees for every transaction, not all of which were accurate. It's one of many examples of how important it is to be mindful of fees, where they come from and how to best manage them.
In Uppababy's case, they are accepting commercial card payments like business and purchasing cards for wholesale orders. Therefore it is crucial for any exam of processing fees to focus on meeting Level 3 qualifications. Now more than ever, asking the question "are we using the right payment technology?" is so important in your effort to lower fees. For example, effective October 2014 Visa will implement Interchange rate changes in the U.S. that will impact credit card purchase transactions made with its Corporate and Purchasing commercial card products. This Visa change will result in an increase of $7 in fees per $1,000 in sales if Level 3 Interchange is not achieved.
There are a number of ways that companies can lower their credit card processing fees. For starters recognize what kind of cards you accept and then compare your acceptance costs with other businesses of similar size in your industry. This easy benchmarking exercise will help you understand what steps to take next before you set out to change merchant services providers.
Security is another cost factor that is often not considered. "Uppababy's wholesale customers generally place their orders through the company's sales reps, including through live chat sessions, phone calls or faxes connecting them with the company's contact center." The next step Uppababy could take is to eliminate these various touch points where sensitive payment data is exchanged. Implementing encrypted payment checkout into chat and replacing phone and fax interactions with PCI compliant IVR or hosted payment pages will make accepting and handling data more secure, reduce risk and PCI compliance costs.
As this blog has said in the past, the right payment processing partner can help merchants implement technology and best practices to mitigate risk and qualify for the best Interchange rates available in their industry. Ultimately, merchant interchange fees are something that every business needs to understand and learn to monitor and manage to avoid paying unnecessarily high surcharges and fees.