Lowering your Overall Effective Rate – The total amount you pay for Payment Processing requires understanding each component of that cost along with how and where they can be lowered or eliminated.
Here are the most effective ways Energy Marketers can lower their credit card acceptance fees
Gateway Fees– A payment gateway is like a digital bridge that securely connects your company’s online or point-of-sale system to payment networks like credit card companies. It validates transactions by checking if customers have enough funds and authorizes the transfer of money for payments.
Traditionally, a Gateway is a third-party company that has their own associated costs. To remove a layer of cost there is also an integrated payment processor which combines a payment gateway and merchant account into one integrated solution. A single all-in-one solution eliminates the need for a third-party gateway like Authorize.net or NMI which means those monthly gateway statements (and fees) go away.
Other things to keep in mind when working with a payment company There are several other benefits in working with a technology-focused payment processor as well, like data ownership, migration assistance, a single point of contact for customer service and more robust reconciliation reporting.
Interchange Fees- Interchange Fees constitute more than 70% of an Energy Marketer’s credit card statement. These fees, paid to card brands, depend on industry-specific rate programs and transaction data. Target interchange is the intersection of properly setting up your business with the correct industry classification combined with the proper data transmission sent to the card brands.
Energy marketers can qualify for utility rates at $.75 per transaction for Discover and Mastercard. Recently, American Express rolled out a program that offers a $.75 flat fee for transactions under $1,000 and 1.5% per transaction for transactions greater than $1,000.
While Visa does not consider Delivered Fuels a Utility, they do offer a “Services” program for marketers which reduces interchange. Keep in mind to qualify for Utility rates for Discover, Mastercard, and AMEX also qualify for the Visa services rates your provider needs to be able to support dual MCC codes. Not all payment companies can support passing two rate programs through their platforms. To ensure the best rates make sure you ask
If your business accepts commercial cards, purchasing cards or government cards, the interchange fees are not covered by the Utility or Services program.
To qualify for the lowest interchange rates, your payment provider must be capable of formatting transactions in a specific way. Failure to template transactions in this manner leads to fee downgrades, resulting in significantly higher costs for each transaction. This aspect is frequently underestimated by Energy Marketers, as most payment providers lack the technology to format transactions correctly.
Best Practices – There are certain card brand rules that when not followed, can increase the interchange fees you pay. For example, capturing transactions after the authorization window can drop the transaction outside of Utility rates. This could result in paying 2-3% x the transaction amount on a given transaction instead of a flat fee of $.75.
Curious if your business is doing all it can to reduce your fees? SEPA members are eligible for a comprehensive payments audit at no cost or obligation. Contact jon@qualpay.com for more information.
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