How to offset credit card acceptance fees

Author DNSPAY Editorial
How to offset credit card acceptance fees

As a business owner, whether you’re running a small startup or managing a larger company, you’re well aware of how much work goes into keeping everything running smoothly—from customer service to marketing and handling payments. In today’s world, accepting credit cards is a must, but those processing fees can really add up. Fortunately, there are effective ways to manage and even reduce those costs without complicating your operations or frustrating your customers.

Here are some simple, practical strategies that can help you minimize these costs and keep more of your hard-earned money. Here’s how to manage credit card processing fees like a pro.

1. Apply a Small Surcharge for Credit Card Payments

One of the most straightforward ways to offset credit card processing fees is by adding a small surcharge for card payments. The fees that processors charge typically range from 2-3%, so you can pass that cost on to your customers by applying a similar surcharge. This way, you’re not absorbing the full cost and can maintain your profit margins.

For example, if your payment processor charges you 3%, you can add the same 3% to the total amount when a customer pays with a credit card. This helps cover the processing costs without burdening you, and it keeps the pricing transparent for your customers.

Transparency is key here. Make sure you inform customers about the surcharge before they reach the checkout. No one likes surprises when it comes to money, so being upfront about this extra charge can go a long way in maintaining trust.

Before implementing this strategy, though, be sure to check your local laws. Some countries regulate or even prohibit surcharges, so it’s essential to verify what’s allowed in your jurisdiction.

2. Accept Payments via ACH (Automated Clearing House)

While credit cards are convenient, they come with higher fees. If you want to reduce costs, consider offering ACH payments as an alternative. ACH payments are typically cheaper for businesses to process compared to credit cards, making them a great option for saving on transaction fees.

For larger transactions, ACH payments can be a particularly cost-effective choice. By offering this option, you not only lower your processing fees but also provide your customers with a more secure and straightforward payment method.

ACH transfers also come with increased security since they are direct bank transfers, reducing the risk of fraud compared to credit card payments.

3. Offer Discounts for Non-Credit Card Payments

Instead of charging a surcharge for credit card payments, you can incentivize customers to use alternative, lower-cost payment methods by offering them a discount. For instance, you could provide a 2% discount for customers who choose to pay with cash, ACH, or another payment method that incurs lower fees.

This strategy is particularly useful for businesses with frequent small transactions. Not only does it save you money on transaction fees, but it also encourages repeat business—customers love a good deal, and offering discounts for non-card payments is an excellent way to foster loyalty.

4. Choose the Right Payment Solutions

Many business owners assume that credit card processing fees are fixed, but that’s not the case. There are plenty of payment solutions that offer more favorable terms, especially if your business processes a high volume of transactions.

Even if you’re just starting out, it’s worth shopping around and comparing different payment processors. Some may offer flat-rate pricing, while others provide volume-based discounts. Take the time to explore what’s available and see if you can negotiate better terms, especially if you process a large number of payments each month.

It never hurts to ask for better rates. Many providers will offer lower fees or additional perks, such as fraud protection or dispute management, especially for businesses with high transaction volumes.

5. Streamline Your Payment System

The more efficient your payment system is, the less you’ll pay in fees. One simple way to cut down on processing costs is by setting a minimum purchase amount for credit card payments. For example, if someone is trying to buy a $2 item with a credit card, it might be worth suggesting an alternative payment method like ACH, for instance, which typically incur lower fees.

Integrating your payment system with your accounting software can also save you time and reduce errors. The fewer mistakes you make in payment processing, the fewer problems and additional fees you’ll encounter down the line.

6. Security and Handling Chargebacks

In addition to managing fees, it's also important to address security concerns. Credit card fraud and chargebacks are an unfortunate reality for many businesses. By choosing payment solutions that provide fraud protection, you can mitigate these risks.

Make sure your payment provider offers chargeback management and dispute resolution services. This will help you handle any issues that arise, minimizing the impact of chargebacks and keeping your business protected.

Credit card processing fees are a necessary part of running a business, but they don’t have to eat into your profits. By adding a surcharge, encouraging customers to use alternative payment methods, offering discounts for non-card payments, shopping for the best payment solutions, and streamlining your system, you can significantly reduce these costs.

DNS PAY provides effective payment solutions to help businesses manage their payments more efficiently and simplify the payment processing. 

As a business owner, staying on top of these details can make a huge difference. By offering multiple payment options and managing fees effectively, you can improve your business’s efficiency, protect your bottom line, and keep your customers happy.