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Take Charge Digital payments can be convenient for consumers, but pricey for businesses. By Dan Edelbrock
every transaction where the card is used to make a payment. International Fee — This world-traveler of a fee is charged on non-U.S. issued payment cards presented as a form of payment to businesses located in the U.S. Chargeback Fee — This payment card fee applies when the customer or their cardissuing bank disputes a payment transaction claiming fraud or faulty goods or services and perhaps non-delivery of same.
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ccepting payments seems like it should be cut and dried. A customer pays an agreed-upon amount for agreed-upon goods or services. All good, right? Well, not quite. Online and digital credit card payment acceptance has grown in popularity over the years because it's so easy and convenient for the consumer. It became even more popular after COVID because it’s also more hygenic and touchless. However, it doesn’t matter how easy, convenient, or touch-free accepting digital payments can be – they still incur acceptance fees.
Understanding these common credit card processing fees can help you become more fee-free. What are tips for being more efficient? TIP #1: Understand various credit card processing fees. Credit card processing fees are fees that are charged for transactions. Understanding the various types of fees can make your business’ payment processing more efficient in the future. Interchange Fee — This charge is collected on behalf of the payment card network on
Contributor ________ Dan Edelbrock is senior vice president of commercial banking at U.S. Bank.
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TIP #2: Pass on the transaction cost. To offset or minimize transaction costs, a surcharge may be appropriate for customers who want to pay using a credit card. Yes, you are passing the majority of the credit card acceptance fee to your customer, but with only cents on the dollar, they don’t feel a huge hit on a single transaction. For your organization, however, those cents add up over hundreds or thousands of transactions a day. Debit, ACH payments, eCheck, and cash payments cannot be subject to surcharges, so make sure your customers know that. If the surcharge information is properly disclosed clearly and accurately, it can address consumer concerns and save money for the business. Businesses that offer their customers an alternative way to pay – aside from in person payment – may also collect a convenience fee for each transaction to help cover the
additional costs associated with the alternative payment method, whether online, through the mail or over the telephone. TIP #3: Accept ACH payments. ACH is short for Automated Clearing House. It’s a financial network that allows direct payments via a customer’s bank account. ACH fees can be less expensive for your organization, depending on the total volume received. A larger volume typically translates to less cost per transaction. Additional Tips Commercial Card Optimization — If your business accepts many commercial and corporate cards, which carry some of the highest interchange rates, this program makes sure that all of the commercial card transactions qualify at the lower commercial interchange rate, saving your business money. Debit Card Optimization — Let’s not forget about the debit cards. This program requires a PIN entry for every debit card transaction. This simple change in debit card authorization can save money by running these transactions through the more cost-effective PIN debit networks. Credit card fees are an unfortunate, but necessary, part of the payment process. Understanding and managing them well can save your business a lot of money in the long run.