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Quick Savings: 3 Steps to Lower Your Credit Card Processing Fees

Updated: Apr 29, 2021



Credit card processing fees can add up to tens of thousands of dollars a year, if not more, in avoidable business expenses. That's why ensuring your business has competitive rates can have a meaningful impact on your bottom line. While many business owners may not know it, lowering your credit card processing fees is not only possible, but now with Zilment it's fast, transparent and easy.


Step 1: Know What You Are Paying

"Credit card fees are complicated. Worse yet, many processors are known to disguise unnecessary fees as wholesale costs."

First, it's important to know your numbers and how you accept credit card payments. We've included a sample statement below that highlights the key metrics that can be found on any statement.


Sample Statement

Key items to note include:


1. Monthly Transaction Volume: This is how much in credit card volume you accept per month


2. Monthly Processing Fees: This is how much in processing fees you are being charged per month and include the following fee categories


A. Wholesale Fees: Non-negotiable fees that include Interchange and Card-Brand fees. These fees are payable to the Card Networks (Visa, Mastercard, Discover, American Express) and to the Issuing Banks (Chase, Wells Fargo, Bank of America, etc.)


B. Processor Fees: Negotiable fees charged by your payment processor. Typically charged based on volume and number of transactions


C. Monthly Fees: Negotiable fees charged by your payment processor and typically categorized as "Monthly Statement Fees" or "PCI Compliance Fees"


D. Occurrence Fees: Fees charged based on certain occurrences such as chargebacks and returns. These fees are charged by your payment processor and are often negotiable


3. Effective Rate: Calculated as your total monthly processing fees divided by your monthly transaction volume; shown as a percentage


"Although knowing your effective rate is the first step, it doesn't tell you if you are being overcharged. It's critical to know how much of this effective rate represents the processor's markup"

It's critical to breakdown your effective rate between wholesale costs and negotiable costs. Unfortunately this isn't easy to do unless you know what to look for. All too often negotiable fees are labeled as wholesale, a practice known as "interchange padding," or they are mis-labeled. Even worse, this may not even be possible if your payment processor doesn't include an overview of your payments by card type. This is usually the case if you are on "flat-rate" or "tiered" pricing


Unfortunately finding your wholesale costs is very time consuming and requires a level of expertise. Even worse, it may not even be possible if you are on "flat-rate" or "tiered" pricing

This whole process can take several hours, which is why at Zilment we built models that do this for you. We've analyzed countless statements so not only do we know what to look for, but we are also able to benchmark your business against similar businesses, allowing us to provide a savings analysis even if you are on "flat-rate" or "tiered" pricing.


With Zilment you can now get a free unbiased overview of your processing rates, empowering you to get the lowest rates at your fingertips

Zilment: Your Credit Card Fees Explained


Step 2: Shop the Market


Now that you know what you are paying, we next recommend that you shop the market. Before reaching out to merchant services providers, figure out what kind of pricing model you want to use and if you have specific equipment in mind.


Choose a Pricing Model:

Tiered: Credit card fees based on "tiers" of cards chosen by the processor. Tiers typically labeled "non-qualified," "mid-qualified" and "qualified." We never recommend this pricing model for merchants because it's typically the most expensive and lacks transparency


Interchange Plus: Credit card fees based on (A) wholesale costs plus (B) a fixed percentage processing fee. Typically the cheapest and most transparent for merchants, especially those processing more than several thousand per month


Cash Discount / Surcharge: This model charges a flat-rate fee to a merchant's customers, resulting in zero credit card fees for businesses. Best for businesses operating in certain industries, such as convenience stores, kiosks, liquor stores, etc.


Flat-Rate: Credit card fees based on a "flat" percentage of transaction volumes. The biggest benefit of "flat-rate" pricing is its simplicity, every transaction has the same processing rate. The biggest drawback is that it can often be expensive, especially if you take a lot of debit cards. Best for merchants that value simplicity over price, or handle lower-volumes, such as food-trucks, coffee shops, salons.


Choose Your Equipment:

Depending on your industry, you may require a specific type of equipment. Restaurants and retail stores typically require a "Point-of-Sale ("POS") System" while a doctors office might only need a simple terminal.


Equipment Options


Equipment can generally be broken down into the following categories:


Mobile / Phone Readers: Best for getting paid on the go or on your phone. This type of equipment is offered by the likes of SwipeSimple, Clover and Square.


Card Reader / Terminal: Traditional card-reader where your customers can swipe or use EMV in-person. Manufacturers of this equipment include Ingenico, Dejavoo, Equinox and Verifone.


POS System: Full-suite payment solution that includes payment processing, inventory management, loyalty programs and scheduling. Best for businesses that handle a high volume of transactions, such as restaurants, bars and retail shops. POS systems can come with or without a built-in payment processor. Systems that come with a built-in payment processor include Clover, Square, Toast and Shopkeep.


Virtual Gateway: Allows you to process payments in a cloud-based virtual gateway. Type-in and store your customers card details or send them invoices by email. Best for industries that take a large number of orders over the phone or online, such as suppliers and distributors. Leading virtual gateway providers include Authorize.net, Paytrace and NMI.


Omnichannel: Process payments in-person and online by combining a terminal / POS solution with a virtual gateway. Best for businesses with brick & mortar as well as online sales channels.


Note on Software Integrations:

Almost all payment processors can integrate with widely used software, such as Quickbooks. However, when it comes to industry-specific software, the unfortunate reality is that some software providers don't allow third party payment processors to connect to their systems. This is because many software providers view payment processing as a way to make extra money, and therefore it is in their best interest to limit your payment processing options and charge high fees.


We have found that the highest processing rates we've come across have actually come from software providers with integrated payment solutions

Get Quotes:

Once you've decided on a pricing plan and the type of equipment you want to choose, we recommend you reach out to a handful of payment processors to get quotes.


Although there are thousands of payment processors, there are far less reputable ones. Unfortunately credit card processing is not an industry that is highly-reviewed, so internet reviews are limited and often have a negative bias. Furthermore, calling around can be extremely time-consuming and is littered with repetitive sales calls.


We've done the hard work, so you don't have to. Using Zilment you can now shop for quotes and equipment from various payment processors, all in one place

Zilment Quote Comparison


We've come across good payment processors with bad reviews and bad payment processors with good reviews. Therefore, it's important that before signing a contract you know that the payment processor you choose is vetted.


At Zilment we've only partnered with payment processors that meet strict criteria, including a "merchant-first" mentality, 24/7/365 customer support and offer best-in-class equipment


Step 3: Switch


Once you've chosen a quote you are happy with, it's time to switch. Despite what payment processors may tell you, this process is simple and requires zero downtime or interruptions.


Although your current processor may try and keep you, we recommend switching. Far too often they will raise your rates as time goes by

How to Switch (with Zilment):


1. Fill Out an Application: Done online and typically takes less than 5 minutes


2. Get Approved: Same-day or next-day approval


3. Get Your Equipment: Shipped straight to your office or place of business, for free.


4. Unplug the Old, Plug-in the New: Unplug your old machine and then plug-in the new machine. If you require specific or more involved hardware, your new processor will work to get the new equipment installed and set-up.


5. Cancel with Old Processor: Call your old processor and let them know you've switched. Also be sure to send in your terminal if it is leased or isn't owned.

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