Sales September 3, 2012 Last updated September 18th, 2018 858 Reads share

Are You Paying Too Much In Credit Card Processing Fees?

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Small businesses need to maximize their profits at every turn. Even a seemingly simple decision – such as which credit card processing service to use – can have a significant impact on your bottom line. If you’re going to stay in business, you have to understand where your money is going.

So, how do you know if you’re paying too much in credit card processing fees? More importantly, what can you do about it?

Here are some warning signs that you might be paying more than you should in credit card processing fees:

You’re losing money on smaller transactions. This is a common complaint for businesses whose average transaction is relatively small. For example, a restaurant might price a cup of coffee at $1. While most customers order more than a cup of coffee, those that do wind up costing the business as much as $.50 in credit card processing fees. Add in overhead and you’re actually losing money. If your business model relies on large numbers of relatively small transactions, you need a credit card processor that fits that model.

You find you’re always paying the highest listed rate for your credit card transactions. The fact of the matter is that credit card processors design their programs with a variety of types of businesses in mind. The idea is that you can pick and choose the processor that makes the most sense for your business. However, if you’re not careful, you’ll wind up with a processor that’s charging higher percentages on your transactions. For example, your processor may charge more if you have fewer than 100 transactions a month, and you may average between 70 and 80 transactions.

Your chargeback percentages are extremely high. You can’t avoid chargebacks altogether. However, if you’re experiencing a significant number – anything over about 2% should be considered significant – you may have a problem with your credit card processing company.

Related: Saving Money In Your Office And In Your Business

If you’re facing any of these situations, there’s something you can do about it. You can maximize your profits by picking the right credit card processor for your needs. Here’s how you can go about doing just that:

# 1. Create a transaction profile for your business

You need to start by knowing what your credit card transactions look like. Do you have a large number of small transactions? Is your average dollar value under $20? Under $5? Do you process more than 50 transactions a month? More than 500? More than 5,000? Depending on your transaction profile, some processors may be right for you while others may not.

# 2. Research the company’s customer service record

This is paramount. Some companies – and we’re not talking about some fly-by-night low-end processor here, we’re talking about major companies – have a reputation for account freezes, high chargebacks, and poor customer service in general. All of these things cost you time and money. Make sure you know what kinds of experiences other businesses have had with your credit card processor before you make the leap.

# 3. Compare like offers from a variety of providers

The credit card processing arena has many vendors who would like your business. Take the time to shop around. Discuss your transaction profile with each vendor, and see which ones can offer you the best deal given your business’ situation.

Profitability is not only key to the success of your small business, it’s one of the keys to its existence at all. Be smart about credit card processing fees; don’t pay more than you have to. If you are paying too much, follow the steps above to find a credit card processor that actually fits your business model.

Related: Top Ten Tips For Managing Your Books

Any questions? Ask me in the comments below!

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David Rodwell

David Rodwell

David Rodwell is a seasoned writer in business and personal finance, taking a particular interest in payment processing technology. He is the editor of, a site that helps small businesses find payment processors that can best suit their needs.

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