Techniques to use when renegotiating for lower credit card processing rates

At some point you started accepting credit cards for the first time. At that point in time your business was young and growing. When you initially set out to establish a merchant account and begin accepting payments, it’s quite possible that as much of the focus was simply on making sure your application was approved as it was on getting the lowest rate that you could.

It’s likely that much has changed since then. If business has gone well your trading volumes have grown, the balance sheet has strengthened, and you aren’t the new kid on the block anymore. If you feel that the time has come to revisit your pricing, you are quite possibly right because the profile of your online payment gateway business has most likely changed significantly. If you want to get a lower rate, you have to ask for it. In this discussion we will explore how you can do that, and go about it effectively.

A surprising number of merchants will try to shop around or renegotiate the rates without understanding their existing pricing. The first stop along the way is to look at your current pricing. Make certain that you understand what you are currently paying. If you can’t do that, learn how to analyze your credit card processing statement to figure out your effective discount rate. You simply can’t get started without understanding what you are currently paying.

Once you are familiar with your existing pricing you must get to know a little bit about interchange and the popular pricing models that exist in the payments industry. We will explore a bit about interchange in this article further below. Without a knowledge of the pricing models, and in particular at least a basic understanding of interchange you cannot set a realistic goal to work towards. If you can be confident in your demands <ahem> “requests”… you can negotiate effectively.

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