What better action can a business owner take than reducing overhead? That’s what we are going to look at now, and we hope you will take action right away on these proven ways to lower expenses.
It may seem obvious, but the number one reason businesses hit roadblocks is financial shortfalls. It’s not competition, poor marketing, or offering unpopular products/services. It is usually a matter of not having enough income combined with costly expenses.
We’ll get right to the nitty gritty with three ways to save money on payment processor fees (easy money with one in particular).
Top 3 Ways To Lower Merchant Account Fees
#1 Switch to a provider that guarantees the lowest rates ($500 guarantee here)
#2 Work on reducing chargebacks
#3 Extend payment options that encourage lower-cost transactions (ACH, for example)
These are items you can act on right away to see valuable results. Plus, you have nothing to lose by taking our $500 lowest-rate challenge.
As for chargebacks, these have a big impact on your merchant account. When you get a handle on chargebacks, you win on several fronts.
Lastly, you may already be offering several payment options to your customers and clients. Still, the payment industry is in constant motion, so don’t miss out on new options that can reduce fees and cater to a wider customer base – more on this coming up in a moment.
Some Hidden Ways You Can Save With A Merchant Account
First, let’s look at ways many merchants miss when it comes to reducing processing fees.
Did you know you can negotiate with your potential merchant account provider? It’s true, and here is why you should do so before signing the merchant agreement. The payment industry is highly competitive and providers want to do business with you. Use that to your advantage when you can.
You might even get concessions from your individual sales rep that the company doesn’t offer or promote.
Some businesses report that their reps can be flexible. How?
By giving the business a free terminal or reducing monthly rates on equipment (examples of what is possible). Again, your sales rep may have leeway that the company doesn’t advertise. The rep could possibly even reduce their own sales commission just to get you to sign with them since, in the long-term, that is a win for them.
No guarantee on that tactic, but it doesn’t hurt to ask, right? More fee-reducing tactics below…
PAYMENT GATEWAY SECURITY AND AVS
Increasing payment gateway security is another little-known step for how to reduce merchant account fees. Getting customer details upfront is more secure, so your rates could be reduced since there is less risk to the payment provider.
AVS (address verification service) is similar as it helps prevent fraud by verifying billing addresses. This feature also helps limit chargebacks. Wins in those areas should reduce processing fees for most businesses.
If you were unaware of the impact those factors make, then it is also a good plan to review your entire merchant account to look for mistakes. Incorrect information about you or your business can mean paying a higher rate than you deserve to pay.
Example errors below:
Account Setup Issues: Data entry errors during initial setup with the payment processor can result in an incorrect or inactive Merchant ID, potentially increasing fees.
Migration or System Changes: Errors can occur when moving to a new payment processor or making changes to the payment system if the new Merchant ID is not updated correctly, resulting in processing errors and fee hikes.
Integration Errors: Issues may arise from third-party shopping carts, plugins, or custom payment integrations if the Merchant ID is handled incorrectly, leading to hiccups.
Security and Compliance Measures: Both overly stringent security measures and non-compliance with industry regulations can result in errors if suspicious activity is detected.
Technical Glitches: Temporary tech issues on the payment processor’s end or in your system can cause communication problems, resulting in errors which impact fees you pay during those periods.
As you can tell, even tiny errors cost your business money. But if you have a quality provider, you will typically get notifications before these events cause serious problems.
So, look for a provider with award-winning customer service.
On that note, the good news is that tiny adjustments have the potential to take your business to the next level while lowering fees at the same time…
Sales Volume Discounts: A Win-Win
Many merchant account providers offer lower rates for businesses that have higher sales volume. National Processing offers this volume discount. Not only that, but we have adaptive plans that help your business scale on the way up to that higher sales volume tier!
Now, it would be a mistake to think it’s overly difficult to increase your sales volume enough to get lower processing rates. We have seen micro businesses that started off with the owners wearing all the hats, doing all the work, then transforming their tiny business into a huge operation!
We have a ton of proven tactics you can use to increase your sales like they did. First, here are three reasons to focus on growth and scaling your business (beyond saving on merchant account fees).
- So you can hire staff to lighten your load
- More income equals more resources to improve your products/services
- The more your business achieves, the more good you can do in your community
Great reasons, right? So, let’s look at ways you can make it happen, starting with a famous financial mind.
WARREN BUFFETT’S SIMPLE ADVICE TO SMALL AND MEDIUM BUSINESSES
“Delight your customers. Think only of that, night and day.”
That is what Warren Buffett advises companies should do. Sounds simple. And yet, you may have expected a complex plan from a man who has had more business success than 99.8% of people who ever lived.
Well, there is a lot to be said for keeping the “main thing the main thing.”
How could your sales volume not grow if you put laser focus on delighting your customers?
The truth is that any business can treat customers well. That is the baseline. Average. Scaling a business requires a drive to go beyond the baseline. Delighting customers is a goal that would be wise to write down and post as a daily reminder.
Here are five easy ways to make your customers feel appreciated:
1) Thank you notes
2) Birthday cards
3) Remembering and using their name
4) Rewards for VIP customers
5) Referral programs with valuable perks
Again, those are simple tactics any business owner can take to increase sales and lead to a volume discount on processing fees. The question is… will you make a plan then take action on these simple tactics?
And when you want to get more creative, you can look into using guerilla marketing strategies (examples below).
Guerrilla Marketing Merchants Can Use To Lift Sales Volume
Guerrilla marketing is all about finding budget-friendly marketing tactics that grab attention and lead to more brand awareness. That leads to new customer acquisition and, ultimately, higher sales volume.
You can see 47 unique examples of this strategy in this short video and we’ll list highlights below.
- Billboards with 3-D features
- Oversized displays featuring small products
- Ironic staging (seatless bench to prompt people to move instead of sit – Nike)
- Incorporating product features into the signage (Mr. Clean)
- Interactive signs
- Reverse trends (like anti-wifi zones for human interaction)
- Highlighting stats/facts that relate to the business and their audience
Of course, there is also the timeless “Guerilla Marketing” book you can utilize. It has been updated many times over the years and continues to be a proven resource for businesses that want to expand.
Want specific examples of guerrilla marketing campaigns? Here are a couple:
In 2012, Dropbox (cloud storage) placed stickers on staircases in major cities. The stickers showed how many steps it would take to climb to a certain amount of storage space on Dropbox. This campaign was an outside-the-box way to promote the company’s referral program. Even digital services can be promoted in the physical world.
Next is Flex Seal’s over-the-top TV ads. Their product is put to use in ridiculous situations that highlight how effective it is for legitimate uses like repairing leaky pipes. Although the ads appear gimmicky, the claims have been backed up by real-world testers who put the product through incredible challenges, and it passed with flying colors. The bonus for the company was the free advertising from those popular tests on YouTube.
So remember, when you combine creative, affordable marketing with the goal of delighting all your customers, you will find growth comes quicker than you imagined!
Just be careful…
Being Organized Pays Huge Dividends for Business Owners
Once your business does grow and you’re saving money on processing fees through higher sales volumes, use caution.
More revenue means you could get overwhelmed. This can lead to disorganization. This happens to many fast-growing companies.
To avoid pitfalls of this nature, look to legitimate organizing experts and methods. Both can help you track and cut out unnecessary expenses – including merchant account fees. Saving money is making money!
There are many software platforms that help keep your business finances in order. And if you partner with a solid merchant account provider, their platforms will integrate reliably with software you already use. Sales data is your friend when it comes to increasing sales and extending a customer base.
Yet, an overall plan to keep your business (and life) organized is a huge help. One method that has gained popularity recently and is used by even enterprise-level businesses is called the PARA Method.
The basic idea is that you can organize everything into just four folders – yes, everything.
What gets measured gets managed. But the first step – the missing step – is to begin by getting organized.
Once you embrace the concept, it might be just the thing you need to keep your business organized.
The key is this: Complex organizing solutions often add extra work instead of reducing your workload. Business owners don’t have time for that, as you know. So, we encourage you to test simple organizing ideas such as PARA first.
Before we get to our Frequently Asked Processing Questions, let’s touch on two more ways to increase sales volume to get lower merchant account rates.
Email And SMS Marketing
Email marketing is renowned for terrific return on investment. Many marketing experts feel that measuring the success of email marketing campaigns is much more reliable than other online advertising platforms’ metrics (online ad click fraud costs business owners millions of dollars).
Sending marketing emails is a way to connect with your customers and provide them discounts in the emails so they return to your shop more often. Coupons and discounts are reported as top reasons consumers sign up for brands’ emails.
SMS marketing (text messages) differs from email marketing as SMS is more immediate and shouldn’t be overused. No one wants five text messages from the same business weekly. Yet, they may enjoy a text update on a huge sale or a “back-in-stock” notification on an item they had previously tried to put in their online cart.
There are platforms designed to help businesses of all sizes increase revenue via email and SMS marketing. You don’t need a huge list of customers to get started, either. Start with customer data you already have (through POS systems), then keep building your list by offering perks when shoppers sign up for marketing messages.
Scale your business with National Processing’s innovative tools and save big on fees! Sign up here.
Wrapping Up Ways To Reduce Processing Fees
To quickly recap. We talked about reducing processing fees in proven ways:
- Compare providers for low rates and dependable service
- Work on chargeback reduction
- Extend payment options to attract more shoppers and find low-cost options like ACH
- Negotiate with merchant account provider
- Increase payment gateway security
- Lift sales to achieve volume discount from provider
We showcased actionable tactics for each of the above and went deep into sales-boosting strategies like guerrilla marketing, digital marketing, and being organized so increased revenue gets properly managed while costly expenses get eliminated.
Thanks for reading (find more FAQ on this topic below).
Merchant Account FAQ
How to reduce merchant account fees for brick-and-mortar businesses?
Create a referral program to increase sales and possibly receive lower processing fees with a volume discount. Also, if you prefer cash, post a sign stating this, or else many customers won’t consider using cash.
What strategy lowers payment processing costs for SMBs running both online shops and physical locations?
Increase sales for better merchant account rates by cross-promoting online and offline deals to ensure all shoppers know your business offers both types of shopping experiences.
Which credit card security measures will cut costs in payment processing for businesses?
The latest security measures accomplish this. To stay ahead of criminals, be vigilant and watch for new POS technology so your systems maximize security. Some of the latest measures are 3D Secure, encryption, biometric authentication, tokenization, and two-factor authentication—which protects customer data when you or your managers log into business systems.
