How Can Businesses Save Money On Retail Payment Processing Fees?


If you are a retail business owner or manager, you know payment processing fees shrink your profit margins. Most retailers already struggle to maintain their profit margins, and the payment processing fees create even more pressure on them. Luckily, there is a way you can save money on retail payment processing fees. Before we consider the solution, let us first understand how the retail payment system works.

How Does Retail Payment Processing Work? 

There are different players involved in a typical credit card payment model. There is the customer, who pays for the product or service using the card issued by a bank. Then there is the card associate, who provides the technology and the license to complete the payment process. 

When the credit card is swiped, a request is sent to the credit card issuer to approve or decline the transaction. If the transaction is approved, the sale goes through and the retailer gets credited for the transaction. The time it takes for the retailer to receive the funds can vary depending on the processing setup. While the authorization and approval are instant, the settlement can take a few business days. The payment also goes through a clearing process before it gets to the retailer’s bank account. 

While the payment processing system can work smoothly, it does result in extra charges for the retailer. There is an assessment fee, interface fee, and payment processing fee. The percentage of these charges depends on several factors, including the type of credit card and state laws. 

Saving on Payment Processing Fees 

Most of the retail transactions are completed through credit card or debit card payments. This offers convenience for customers as they don’t have to carry cash. Credit cards allow customers to make purchases using credit, which has its own pros and cons. Accepting credit cards is not an option, but a necessity for businesses. However, there is a way they can save on payment processing fees. 

A great way to save on retail payment processing fees is to implement a zero-fee processing system. It might sound too good to be true, but an increasing number of retailers are moving to such systems to protect their profit margins. Zero-fee processing systems also help boost customer satisfaction. 

There are different types of zero-fee processing systems. A cash discount program works by incentivizing the customers to use cash by offering them a discount. Cash discounting is a benefit for the retailers and the customers. While the retailers get to avoid credit card transaction fees, the customer enjoys a reduced price. 

Surcharge programs are another way to save on payment processing fees for retailers. In this program, you can charge a small amount on top of the price to cover the credit card transaction charges. 

You can also use a dual-pricing model where you offer the customer the choice to pay a cash price or a credit card price. With the cash price, they get a discount. If they want to use a card, they pay a bit extra. 


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