It’s easy to do for a single billing cycle based on the cards that were processed during a single month, but over time you’ll probably end up paying more. Don’t fall for the old “whatever you are paying, we can beat your current rate” sales pitch.The only money your processor should be making on your account is the processing fee, and you want that to be as low as possible. you pay what your merchant pays without a markup). Negotiate for a pass-through rate on interchange and assessment fees (i.e.Doing this can also help to reduce fraud. Have your staff confirm the customer’s correct address and zip code and enable the address matching feature.Make sure your equipment is up to date and that it complies with current standards.There’s no legal reason you can’t do this. Limit how much you will allow a customer to charge on a card (especially when it comes to purchasing a vehicle).You are probably paying the same base rate for each card type that Wal-Mart pays. Know that in most cases, interchange and assessment fees are not negotiable.Have a basic understanding of how credit card processing works.What can a business do to reduce the costs (essentially a business tax) associated with accepting credit cards? Here are some of the tips I give to dealers. The highest cost you can pay is manually entering the card number and the address in your system not matching up with the billing address. Your team manually entered the card number instead of swiping it, which will cost you. You swiped the card instead of inserting it and using the chip, there is a penalty for that. The zip code in your DMS doesn’t match up with the customer’s billing zip code. Everything you do that deviates from the best-case scenario costs you more. The lowest cost per card is typically obtained when the card is chip-enabled, the business has PCI-compliant equipment, and the customer’s zip code and address match up with what the processor has on file. It’s important for business owners to understand that the same card can incur different fees depending on how the transaction is processed. There are other incremental fees, but these are the key item to focus on. Dealers need to understand there are differences between credit and debit cards and the costs associated with each one, but for simplicity, in this article, I’m only going to focus on credit cards.Ĭosts for processing credit cards fall into four primary categories. Understanding the costs and processing fees can also go a long way to helping dealers to negotiate reasonable rates. While it’s almost impossible for a business not to accept credit cards, there are many steps that can be taken to minimize the cost of processing those cards. Each day you accept credit and debit cards, some of your profits are siphoned off by a third party. That movie could have easily been about the credit card industry. Do you remember the movie where the guys modified a computer system so that the small amounts rounded off from transactions were deposited into their banking account? They thought that it would generate a few bucks, but quickly turned into millions of dollars. In building a system that involves a multitude of parties and layers within the system, it’s easy to find areas where costs and fees can be added in, ones that are easy to overlook. There’s a reason why the ability to compare and shop credit card merchants are so complex. Sheffield, a former dealer principal who now steers dealership owners in the right direction as a 20-Group facilitator for Spader Business Management, provides dealers with a timely piece on credit card fees.
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