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May 16, 2022
by David Goodale

How to Negotiate Lower Credit Card Processing Rates

(Slightly edited from video transcript for greater readability)

David Goodale: 00:00

Hello, David here at Today, I'm going to give you a short bit advice that could commercially potentially really help you. It's about how to get lower rates. How do you negotiate your rates down? Stay tuned. I'm going to dig in in one second.

David Goodale: 00:17

So if you're like every business owner in the history of earth, you want low rates, nobody wants high rates, but how do you do it? How do you get low rates rates depend on two things, primarily the trading volume that your business processes and the risk associated with your product and service. There may be other small components that work their way in there a little bit, but that's like 99% of it. Walmart gets a lower rate than a corner store because they do a bazillion dollars a month in credit card sales. Now, if you have a business selling socks and then you have another business selling, I don't know, casino, gambling, online gambling, which one of those sounds higher risk when I say high risk, I mean, which one is more likely for there to be disputes between the card holder and the merchant because where there's a dispute, it means there can be a chargeback.

David Goodale: 01:08

When a chargeback occurs, the card holder has to get their money back. If the merchant cannot or will not put the money up, then the payment processors on the hook for it. The short version is the more risk there is with a merchant account. The more money the payment processor can lose. So I want you to think about your business right now, how much money do you process and in what ways could the payment processor lose money in with your business? Let's say that you've been in business a really long time and you're very profitable and you have virtually no chargebacks and you sell a service that by the time you take a payment, the service is already being rendered. There can't even be a dispute because the customer wouldn't have given you their credit card. If they weren't happy with the thing, the job that you just did, all of those things that I'm describing are an ultra low risk business.

David Goodale: 01:56

If a payment processor knows those things, there is no reason why they shouldn't give you a low rate. So the big point that I want to make today is if you're shopping around, or even if you have an existing payment processor, and you're not happy with the agreement that you have, the rate that you're paying, tell them and tell them why not confrontationallybecauseit's not. It doesn't have to be, you know, the way that we work with our clients at merchant accounts do CA we're friends with our clients. Like I know my clients that I work with very well, like very open communication, not every payment processor is exactly the same, but they should all care. So you need to open a dialogue with the company that you're working with or that you may be working with and tell them clearly why you feel your business is not high risk.

David Goodale: 02:40

We've been in business a long time. We process $300,000 a month in sales. We get less than two disputes a year. And 90% of our customers are long term customers who keep coming every month. I mean, and what kind of, what kind of processor isn't going to want that business? I do. I mean, I just made it up. I don't know what merchant I'm describing, but the point being, make a, a clear and compelling statement that explains why or low risk. And if the people aren't listening to you find another payment processor that will reward your business. If you have a high risk business, I'll probably do another video in the future about how to address rates from a high risk merchant perspective, but you will pay more. I want to make this video very short. I don't want to go too far because it's too situationally specific depending on the business. But if you feel that you should be getting low rates and you aren't, and you're searching for a quote, we would certainly be happy to quote We work with Canadian, us European and UK based merchants. I hope I've demystified this a little bit, given you a little bit of insight. Thanks for watching and have a good day there. Bye. Now.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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