Processing fees eat away at the rock bottom line of any business transaction involving credit cards. Mastercard transaction fees are typically about 2% of every payment-network-specific rates are mentioned within the table below.
Businesses have some control over costs by comparing payment processors. They will find themselves receiving favorable pricing, which could end in substantial cost savings over time.
To be ready to go searching, it is vital to have a firm grasp on the topic at hand. To that end, we’ve compiled this guide to mastercard processing fees to provide merchants with the information they need to successfully implement Mastercard payments for their business.
Simply accept credit cards as a way of payment, the bulk of companies must register with a merchant services company. These MSPs function as intermediaries between merchants and credit issuers.
However, never underestimate your ability to barter and advocate for your company. By developing business awareness, honing your negotiation skills, and properly managing the processing landscape, you’ll equip yourself with the tools necessary to secure rock bottom MasterCard processing fees possible. This is often how.
1. UNDERSTAND the various MODES OF PAYMENT
Understanding the various MasterCard transaction fees can assist you in determining how your business can economize. Three major pricing mechanisms should be considered:
A FIXED RATE payment model is one in which a retailer pays an equivalent rate on almost all transactions.
Your monthly processing invoice is going to be calculated on a hard and fast percentage basis counting on the number of payments.
Typically, swiped purchases incur a lower flat rate, while CNP (Card Not Present) transactions incur a better flat rate. This is often because a virtual payment transaction carries a better risk.
At first glance, this model appears to be the most straightforward option for your company. Although it’s straightforward to forecast the monthly cost for income purposes, you ought to be mindful that the flat rate is nearly always inflated to hide the processors’ expenses.
Additionally, a flat-rate model provides a limited window for negotiating a lower cost. Thanks to the very fact that each fees and assessment are combined into one flat rate, a business owner can not identify individual charges to exclude.
Oftentimes, tiered pricing is comprised of three bundles: eligible, mid-qualified, and unqualified. Each package is priced differently and is comprised of interchange rates and therefore the processor’s markup.
An eligible rate is the cheapest rate available for accepting card payments. This tier is applicable to regular debit and credit cards. A mid-qualified rate is the second-lowest calculated rate and includes loyalty and membership rewards cards.
Finally, the most expensive rate may be a non-qualified rate, which is typically related to business and foreign credit cards.
The first step toward lowering payment processing fees is deciding the pricing structure that’s most appropriate for your company. Then work with a merchant provider who is committed to assisting your company in meeting its objectives.
2. REDUCE FEES FOR NON-PROCESSING
Along with interchange fees, there are also other costs related to payment acceptance. These payments can include monthly or annual account management, monthly minimum processing, or rental costs if your company leases terminal equipment.
The good news is that these payments are nearly always negotiable because they break away the value of payment processing. Examine your most up-to-date processing statement – if you’re charged a fee that you simply don’t understand, request evidence from your processor.
Any open and reputable provider will gladly walk you through the pricing structure. Solicit a discount on expenditure where you think it’s appropriate.
Since the bulk of providers trusts their customers, they’re going to work with you to make sure you’re comfortable with the fees related to debit or MasterCard acceptance.
3. OPTIMIZE the kinds OF TRANSACTIONS
Certain transactions are costlier than others. For instance, open-end credit costs are often less than Mastercard costs. On the opposite hand, keyed-in sales outnumber swiped sales.
Improve your understanding of your customer base to determine the source of your highest processing costs. If you’ve determined this, you’ll devise a strategy for lowering payment costs in areas where you currently invest the most.
4. IMPLEMENT AN ADDRESS CONFIRMATION PROCESS
AVS, or Address Verification System, verifies a customer’s billing address with their MasterCard issuer. It’s a superb method for detecting and preventing fraud. Additionally, AVS will assist you to economize on processing. Numerous processors reward merchants who use AVS. Visa, for instance, offers a lower interchange rate on transactions that include an AVS search.
5. REDUCE TRANSACTIONS INVOLVING CARDS NOT PRESENTED
Avoid manually entering card information, especially in point-of-sale environments. Individuals should ideally swipe their cards, enter a PIN, or use an EMV chip.
Related: How to accept credit cards?