The Art of Negotiating Lower Credit Card Processing Fees

NACS can help savvy merchants negotiate better rates.

July 16, 2014

NEW YORK – Negotiation is an art form which comes naturally to some people. For most business owners, however, negotiating with vendors requires a combination of new expertise and a little bit of charm — particularly in the bewildering world of credit card processing, according to an article this week in Business News Daily.

"Credit card fees are oftentimes the fourth-biggest expense category, behind employees, advertising and cost of goods," Mark Abrams, president of E CONOMY, a payment processing solutions provider, told BND. To get the best rates and avoid additional costs, the first step is knowing which type of credit card processor is right for your business.

"The biggest secret with credit card processing is that just about any respectable payment processor has the ability to match or beat the rates and fees offered by any other company," Abrams revealed in the article. "Almost no processor has any significant price advantage over any other processor. It's all about negotiation."

Abrams shared the following tips with BND, to guide small businesses through the process of negotiating lower credit card processing fees. 

  • Demand Interchange-Pass-Thru Pricing. Also known as cost plus or interchange plus, Interchange-Pass-Thru Pricing is the fairest and most transparent pricing method. Interchange-Pass-Thru Pricing is the only way to compare different processors side by side. The processor makes most of its money by tacking on a percentage markup and/or transaction on top of the actual network fees. The more transactions you do in a month, and the higher your sales volume, the more negotiating power you will have. However, the second-biggest secret is that the rates/fees you get have more to do with your ability to comparison-shop and negotiate than with anything else. Ask at least five companies for a proposal.
  • Ask for price matching. Make a spreadsheet and compare the fees across the different companies and Keep in mind that any processor will typically match or even beat the fees offered by a competitor.
  • Pay for equipment. Do not accept free gifts like credit card terminals or POS systems. As enticing as these may seem, you will pay for them one way or another, usually in the form of higher fees and a contract term.
  • Negotiate out of a contract term. Most processors will try to stick the merchant with a two- to five-year term; however, in today's hypercompetitive landscape, as long as you did not accept free equipment, it is very easy to negotiate out of a contract term.
  • Request a sample monthly statement. Once you've narrowed it down to a few processors, ask to see a sample monthly statement. All line items should be clearly labeled, and each fee should be itemized. If the statement is too difficult to read, move on to another processor.

Available exclusively to NACS members, the NACS Card Processing Program (CPP) is designed to reduce card processing fees for unbranded convenience and fuel retailers. Participants in this program enjoy reduced fees as a result of processing efficiencies and combining their transactions with NACS members and others in the industry. To help retailers get the lowest possible transaction cost in the industry, NACS has partnered for over ten years with a trusted, high-quality payment processing company, First Data. With no hidden fees, percentage rates or complicated statements, NACS CPP offers NACS members a flat 3.9 cent transaction fee after interchange on all card payments. For most small to mid-size retailers, this flat fee is considerably less than the rate banks will charge. For more information, click here or email