Money & Business Pro Tip: Reduce Credit Card Fees by Switching Provider: Associations Now



By Ernie Smith / October 25, 2021
(mega-flopp / iStock / Getty Images Plus)

It may be worth taking a look at the market to see if you can save money on credit card transaction fees.

In our increasingly cashless world, it is a reality that many association transactions are done using credit or debit cards, in e-commerce environments and beyond.

And electronic transactions are chargeable, whether they originate from card networks such as Visa, Mastercard and American Express; card providers who manage cards for consumers; or payment processors that help manage transactions.

So what can your association do to ensure that it minimizes these additional costs when accepting credit card charges? One place to look is your payment processors and if the options are brighter on the other side.

The strategy

Put simply, it’s worth looking for a new payment provider every now and then.

As Nerdwallet explains, accepting digital payments introduces many fees, including interchange fees (which are paid to the card provider), evaluation fees (paid to the card network), and processing fees. The total amount of the processing fee can vary widely, averaging between 1.5% and 3.5% depending on the payment method, card network and type of transaction, depending on Payment deposit. The number of transactions managed by your organization can also affect transaction fees.

Most associations interact with payment processors in ecommerce settings through their association management system, with some common providers being Braintree, Stripe, Square, Clover, and CardConnect owned by PayPal. Finding alternatives could help eliminate opportunities to cut costs down the line.

Why is it effective?

Knowing your options could help you discover better rates and find alternatives to your current system. This could create an opportunity to negotiate a better deal, Merchant Maverick noted. But beyond the fees, the website’s Chris Motola said he might also find a better fit for reasons other than cost.

“You’ll also want to think about safety and accountability,” Motola wrote. “If you work in a high-risk industry where any business is likely to experience a large number of chargebacks, you will need to find a processor that specializes in working with these types of businesses. “

Now, to be clear, any changes you make will need to be integrated through your existing application programming interface – and you might not be able to switch card vendors if your AMS vendor doesn’t offer an alternative – but a quick glance at the market could offer room to save money on every transaction.

What is the potential?

Finding a good supplier that works for your association could also have benefits for your members, as you can introduce your processor to your members through an affinity program.

For example, the American Bar Association offers its members discounted access to the LawPay service as a member benefit, creating a potential new source of revenue for the organization, while also saving money through a new payment processor.

After all, if you need a transaction fee deal, chances are your members will, too.

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