If you’re like most other Australian businesses, you know the importance of cutting costs to stay competitive. One area where your business may be able to save money is with credit card processing fees. Here are six strategies for retailers to cut credit card processing fees without sacrificing customer convenience or service:
1. Leverage Interchange Optimisation: Interchange optimisation technology enables businesses to process credit card payments more efficiently and reduce processing costs by routing transactions through the least expensive card network.
2. Negotiate Discount Rates with Your Processor: It’s important to review your current processor’s fees and terms periodically, and always negotiate for better rates if they’re available. Sadly, many businesses just accept the rates they are given without question.
3. Accept Alternative Payment Methods: While credit cards remain a popular payment method for online shoppers, accepting alternative forms of payment can help you cut your processing fees. Alternative payments, such as Apple Pay, Google Pay and e-wallets have lower transaction fees than traditional cards, allowing merchants to save money.
4. Review Your Monthly Statement: Be sure to review your monthly processing statement closely and dispute any erroneous fees. Many times banks charge merchants hidden fees and surcharges that they’re unaware of, so it’s important to stay on top of it and make sure everything is being billed correctly.
5. Surcharge Customers: Some retailers will add a surcharge to customers’ bills if they pay with credit cards. This is an option for merchants who want to pass the costs of processing fees onto their customers. While this might be seen as controversial in other countries, this is part of the payment culture in Australia, so you don’t need to worry about upset customers – it’s just like the tipping culture in the United States.
6. Choose Affordable Payment Processors: Not all payment processors are created equal – some may be more expensive than others, so it’s important to shop around and find one that offers a good price. If you’re a small business, some payment processing companies cater specifically to small businesses and offer lower rates than larger processors.
Don’t Just Accept High Fees
In 2023, the Reserve Bank of Australia implemented changes to the payments industry that cap the maximum merchant fees that can be charged for credit card payments. This means retailers must be mindful of the fees they are paying and make sure that the cost to their business is not too high. It also means that retailers should shop around and find a good deal on their credit card processing fees. A good way to start is by talking to your current provider and seeing if they can offer better rates.
Next, consider a payment solution that allows surcharging. This means that retailers can charge a cost-based fee to customers who pay by credit card, allowing them to pass on the additional costs associated with processing credit cards to the customer. This is a great way for retailers to offset some of the cost of processing credit card payments without having to increase their prices.
With a proactive approach, you can cut credit card processing fees this year!