Here’s How to Get the Lowest Credit Card Processing Rates

We’ve said it before and we’ll say it again: Small businesses simply can’t afford not to take credit card payments. 

But credit card processing doesn’t come free. You have to pay for this service. That’s why many merchants look for the lowest credit card processing rates. 

Below, we’ll go over how to find out what you’re paying now, how to research the best credit card processing rates for small business, and what you can do to lower your credit card processing expenses. 

First, find out what you’re paying now

Before you set out to get the lowest rates, you’ll want to understand the rates you’re currently paying as a baseline. 

A couple things you need to know: 

• Processors have different fee structures. There’s interchange plus, tiered, wholesale, and flat rate. The cheapest really depends on your business, how much you process in credit card transactions, and how that stacks up against your processor’s pricing structure. 
• Many processors will try to sneak in extra fees. Make sure you read your credit card processing statement every month. Many companies will tack on hidden fees that can add up if you don’t nip them in the bud. 

Now, look at your merchant account statement. First, you’ll want to calculate your effective rate. This is what you actually pay to process credit card transactions, including any processing fees and markup. Then you’ll want to subtract the interchange fees from the total fees to find out exactly how much markup your processor is charging. You’ll want this information when you negotiate rates. 

Research other credit card processors

You have a clear picture of where you currently stand, so you’re ready to do some research to see what else is out there and how it stacks up. To find a different credit card processor, you can start with a Google search or query out to your network of fellow business owners. Read third-party review sites as well as real customer reviews. 

Many credit card processors will have a pricing option in their website’s main menu. If you can’t find it there or in the footer, try a quick Google search. 

Pro tip: Type in “pricing site:” followed by the URL of the processor you’re researching. This will do a scan of all the pages on that site and that site only, so you won’t have to sift through tons of search engine result pages. 

Make note of not only payment processing fees but other ongoing fees like monthly access or service fees, statement fees, etc. You’ll also want to note upfront costs for signup, installation, setup, hardware, etc. 

Once you have a list of cheap credit card processors and their pricing, look back at your own transaction data. Plug your numbers into each processor’s pricing structure to find out what the fees would be. Then remember to add those incremental numbers.

You’re almost ready to run your credit card processing rates comparison.

Other things to keep in mind: 

• Foreign currency conversion (if you sell internationally) 
• Card-not-present fees
• Transaction minimums
• Contracts (and fees to break it) 
• Required hardware costs
• Qualified vs. non-qualified transaction rates

Tips to lower your credit card processing expenses

Ask for a lower rate while you shop around

If you want something, sometimes it’s as simple as asking for it. Even though you may have signed a contractual agreement, those terms are always negotiable and you’re well within your right to ask your processor if there’s any way they can lower your rates. 

However, Ellen Cunningham of CardFellow doesn’t recommend this as a permanent solution. Instead, consider this as a short-term fix while you continue to shop around for the best rates on credit card processing. 

“A processor that’s overcharging you now will overcharge you in the future. Why give them another chance to keep the high rates going?” she told us. “This is particularly true if your processor uses tiered pricing, the kind with non-qualified rates. If so, switch and switch soon.”

She also recommends double-checking that their lowered rate is truly a discount — processors can be deceiving. “Processors are happy to lower your rates… temporarily. Then they slowly raise pricing over time,” she said. “Or, if you’re on tiered pricing, they’ll just start considering more of your transactions non-qualified and charge the higher non-qualified rate. Your rates went down, but your actual processing costs didn’t.”

When you go to negotiate, arm yourself with the information you need to make a strong argument. Do you always pay your statements on time? Have you been with the processor for a long time? Have you been patient with their slip-ups? Each of these factors can be a way to make your case. 

Reduce your risk for fraud

Fraud is scary for business owners. Some predict card-not-present (CNP) fraud will cost retailers $130 billion from 2018 to 2023, while payment processing companies alone may pay $10 billion by 2023 to detect and prevent fraud. According to LexisNexis, the US eCommerce space reported a 34.4% increase in the cost of fraud in 2021 – and they noted a 140% increase in fraud attacks since 2020.

According to the NRF, fraud is THE top payment-related challenge retailers have in their business.

Luckily, there are ways merchants can protect their businesses from fraud, thus reducing the credit card processing expenses that go along with it. Here are just a few: 

• Physically check the credit card. If it looks weird, trust your instinct. It’s okay to ask for photo identification to verify cardholder identity.
• Watch for high-risk transactions like jewelry, electronics, or other expensive purchases — as well as gift cards (especially in bulk). 
• Opt for a PCI compliant processor. Even if you have to spend a little extra, PCI compliance can save your business thousands (or more) in the long run. 

Related: What are PCI compliance fees and should you pay them? >

• Accept EMV payments. These chip-enabled cards are more secure than the traditional swiped credit card transaction. 
• Use Address Verification Service (AVS). This is when your payment processing system checks the credit card address against the customer address to ensure the two match. 
• Train your staff to watch for suspicious signs of fraud. Empower them with the information they need to properly handle potentially fraudulent transactions. Create and document protocols. 

Get more resources to fight fraud in your business: 

• 5 Types of Retail Fraud and How to Prevent Them
• 12 Ways to Prevent Credit Card Fraud at Your Business
• 7 Credit Card Fraud Detection Steps to Take in Your Business

Change your store policies

Credit card processors may change different rates for different transactions. You can adjust your store policies to ensure each transaction sets you up for affordable processing rates. 

For example, you might establish a minimum transaction value. Or, you might not accept a specific payment type because it comes with higher processing fees. American Express is one credit card that typically brings higher processing fees. 

Keep in mind that any changes to your policies will also have an effect on the customer experience. You need to weigh the pros and cons — is the credit card processing expense worth it to keep your customers happy, or can you institute new policies without disrupting the customer experience? 

Get cheap credit card processing rates today

Payment Depot offers flat rate pricing with a monthly membership model — no surprises, no sneaky extra fees. With Payment Depot, merchants get access to cheap wholesale rates.