I recently found an older article at Internet Retailer magazine, entitled How to Pay Less for Payments by editor Don Davis. It has some good stories about business owners negotiating credit card processing deals to save money.
To get the best deal, retailers must be prepared to go shopping among the many processors—or transaction acquirers in payments lingo—vying for their business, and to examine every rate and fee in the contract, says Allen Weinberg of payments consulting firm Glenbrook Partners.
“The guiding principle is that everything is negotiable,” Weinberg says. “But it’s important to keep in mind that every acquirer has a profitability target they feel they must meet. If you win on a couple of points, they will likely try to make it up in another area.”
and…
a note on downgrades (emphasis added)
The acquirer will likely emphasize the rate it charges on a standard Visa or MasterCard credit card purchase—2.2% of the transaction amount plus 30 cents is a typical charge for midsized online merchants. But that won’t be the rate on every transaction, because the Visa and MasterCard interchange rates—the fees acquiring banks pay to card-issuing banks—are higher on certain kinds of plastic, such as rewards cards and corporate cards. And some acquirers will add their own mark-up to the higher fees on those cards.
And a note about the difficulty of switching payment providers for an online merchant (it’s not that hard):
For many online retailers, switching processors is easy because they connect to the processors through gateways—VeriSign, Authorize.Net and USA ePay among others—that each have links to many processing companies. The processors in turn connect to the card networks for authorizations and to the banks that settle funds among card issuers and retailers.
The Bowl Co., for instance, has integrated its back-office system with Authorize.Net and other gateways. Changing from one processor to any other connected to those gateways just means changing the account number the retailer uses, Dumont says. “For me, it’s a matter of changing a few lines of code.”
If you are an online company that accepts credit card payments, check out the article, Don Davis is an expert on the topic, before his role as editor of Internet Retailer magazine he was the editor for a payments-related industry magazine, and the article is exactly on-point.
And, if you don’t want to waste a lot of time shopping for a new credit card processor, consider running an auction at TransFS.com to get a number of competitive bids from high-quality credit card processors in just a couple hours.
