Many small business owners are finding themselves spending more on credit card processing fees, as safety-conscious consumers gravitate toward cash-free transactions. Here’s what you can do to ensure these fees don’t make a dent in your profits.
Insisting on cash-only purchases is a tried-and-true way to avoid swipe fees, but it won’t work at many businesses. Say no to cash and you’re likely to see some consumers walk out the door.
So what can you do to offset or reduce credit card fees? Plenty, it turns out. Here are some suggestions.
How to offset credit card processing fees
Build higher fees into your pricing
To take into account credit card processing fees, you don’t necessarily have to discount cash purchases. Some merchants prefer to mark up all of their products and services slightly, to cover the cost of accepting credit cards.
Double down on your most profitable products or services
Look for ways to sell more of your biggest-selling items or services. If you are bringing in high profits, costs like credit card processing fees will not have as large an impact on your bottom line as they would if you are barely breaking even.
Have the right merchant services contract
If you are paying very high fees, you may need to switch to a contract that is better designed for the type of transactions your business tends to do right now.
Let’s say you run a restaurant that once did most of its business on site. People are now mostly phoning in takeout orders. You may be paying substantial processing fees for all of the “card not present” transactions.
If so, talk with your banker about whether it’s time to update your merchant services contract to one that is better tailored to the types of transactions you do now.
Also, take a second look at your contract if you’ve added different products or services. Credit card processing fees are tied to your industry, so if you have stepped into a new one by virtue of a new product you sell, you may need a contract more suited to that industry.
See related: Small business guide to credit card merchant fees
Keep your equipment up to date
If your point-of-sale terminal is malfunctioning and customers have to swipe their chip cards instead of dipping them, you could be paying higher fees because the transactions are less secure.
Replacing or repairing broken equipment is likely to reduce the fees you are paying. In a business that does a high volume of transactions every day, those fees can add up.
Train your team on card-handling procedures
Even if your terminal is working properly, you’ll still pay higher fees if your cashiers forget to ask customers to dip their chip cards instead of swiping them. Make sure to do a periodic refresher for your team so you don’t pay unnecessary fees.
Accepting credit cards may give you a competitive edge these days, but it comes with a cost. Staying on the lookout for ways to offset and reduce processing fees will help you build a more profitable business.