Help your merchants take the sting out of the cost of payment acceptance

By Michelle Jordan, SVP and Head of Payment Optimization

The weighted average cost of payment acceptance is expected to have doubled from around 0.8% in 2009 to over 1.6% by 2025.[i] Fueled by the abundance of rewards cards, the shift to online payments, and the rise of commercial purchasing cards, merchants are experiencing higher transactions fees.

You can take an active role in helping your merchants rein in the rising cost of payment acceptance. Work with a partner armed with practical solutions to identify opportunities to help your customers take the sting out of the cost of payments. Let’s take a closer look.

Four ways to optimize transaction costs

1. Avoid transaction downgrades – Downgrades occur when a transaction doesn’t meet the minimum requirements for the target Interchange category. The costs add up, but the good news is that they are easily avoidable.

How you can help: Educate your merchants about the importance of including Address Verification Service (AVS) data for keyed transactions, settling transactions daily, ensuring authorization and settlement amounts match, and separating purchase amounts from sales tax and tips.

2. Optimize commercial cards – Businesses and government agencies that process a large volume of commercial card transactions can reduce related expenses by transmitting purchase details with each transaction. Validating authentic transactions with purchase information results in less risk and lower interchange rates. However, Level 2 and Level 3 data entry—up to 25 specific data fields—is time-consuming and prone to error.

How you can help: A managed Commercial Card Optimization program removes your merchants’ burden of accurate and detailed data entry. Proactively capturing all the data points necessary to meet Level 2 and Level 3 interchange qualification requirements results in a significant savings opportunity. Businesses generally experience a 0.4-1.5% decrease in their average commercial card acceptance rates for all qualified B2B transactions.

3. Implement in-person PIN prompting – Merchants can accept most debit cards with or without PIN prompting. Transactions without a PIN authorization transmit over the card brands’ credit card routing networks, and those with a PIN entry ride the lower-cost debit rails.

How you can help: Reduce transaction costs with automated PIN debit prompting, which eliminates manual prompts and routes transactions through lower-cost debit rails, saving 10% – 25% per debit transaction. You also mitigate the risk of fraudulent use of the debit card by providing the debit cardholder with another point of transaction authentication.

4. Introduce credit card surcharge – Business owners of all types and sizes have seen the cost of goods and labor rise. Passing credit card acceptance costs to customers for purchases made in person or online can help combat operational costs and create significant savings.

How you can help: Show how a card brand-compliant surcharge program saves money while allowing customers to avoid the surcharge by paying with a debit card, cash, check, or ACH transfer. Credit card surcharging only amounts to a few cents on the dollar and can be a success if communicated appropriately to customers.

Help your merchants stop spending so much to get paid

Build trust and deepen relationships by delivering solutions to your merchants that save money on payment acceptance. Tap into the knowledge of an experienced team of payment optimization consultants. Ready to learn more? Contact us today for more information.

[i] CMPRSI

Currently Credit Card Surcharge is not supported in Connecticut, Maine, Massachusetts, Puerto Rico, or the Canadian Provinces. Although we offer surcharging in most states, Merchants are responsible for determining the legality of surcharging in their state, and merchants are liable if their activities are found to be unlawful. Credit card surcharge applies to credit card only, not available on debit.