Payment Processing for Small Business: Five Cost-Saving Tactics You Can Apply Today
Jun 19
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Managing payment processing can feel overwhelming for small business owners. Hidden fees, complex pricing models, and outdated point-of-sale (POS) technology can significantly impact your bottom line. At Wingman Payments, we specialize in helping small businesses simplify their payment processing, with transparent solutions that keep costs low and operations running smoothly. Here are five actionable tactics you can implement to start cutting payment processing costs and improving your business’s profitability.
Understanding Payment Processing Fees
Before diving into specific cost-saving tactics, it’s important to understand the various payment processing fees that affect your business:
Type of Fee | Description | Negotiable |
Interchange | These are fees set by card brands like Visa and MasterCard and go to the bank that issued the customer’s card. | No |
Assessments and Dues | Also set by and paid to the card brands. | No |
Discount Rates | These are the fees collected by your merchant services provider | Yes |
Authorization Fees | The are transaction fees for every authorization or transaction collected by your merchant services provider | Yes |
Monthly Fees | Fees for services like account statements, customer support, and account maintenance. | Yes |
Annual Fees | These should be avoided—they often mean you’re paying too much. | Yes |
Occurrence Fees | These happen only when specific events occur, like chargebacks or rejected payments. They are somewhat negotiable but typically don’t impact your overall costs much. | Yes |
Knowing these fees helps you identify where you can save and how to choose the right merchant services provider.
Payment Processing Pricing Models
Understanding the different pricing models empowers you to select the best one for your business while avoiding hidden fees.
Pricing Type | Description |
Flat Rate | A simple, fixed percentage on all card types — easy to understand, but may not always be cheapest. |
Tiered Pricing | Groups transactions into qualified tiers, which can be confusing and sometimes more expensive. |
Interchange Plus | The most transparent, showing the exact interchange fees plus a processor markup. Ideal for businesses wanting full fee visibility. |
Surcharging | Charging credit card users a fee to cover processing costs; highly regulated, and must be used carefully. |
Uses specialized POS systems to offer separate prices for card and cash payments, passing most processing fees to cardholders. | |
Cash Discount | Automatically apply discounts to cash payments, encouraging customers to pay cash and reducing card processing fees. |
Tactic #1: Implement a Cash Discount Program
Cash discount programs encourage customers to pay in cash by eliminating or reducing credit card processing fees. Here’s how a cash discount program works:
Step 1: | Adjust pricing to reflect a discount for cash payments. |
Step 2: | Clearly advertise the cash discount to customers, ensuring they understand the benefits. |
Step 3: | Train staff to effectively explain the program to customers during transactions. |
Real Success Story:
Kennesaw Chiropractic cut their merchant service fees by 95% by switching to a dual pricing program with the Dejavoo POS system. Patients could easily see and choose their payment options, reducing frustration and saving money for the business.
Tactic #2: Streamline Your POS & Payment Technology
Cash discount programs encourage customers to pay in cash by eliminating or reducing credit card processing fees. Here’s how a cash discount program works:
Faster, efficient transactions reduce labor costs and errors.
Improved customer experience leading to repeat business.
Enhanced data security and PCI compliance.
Real Success Story:
Kona Ice in Alpharetta switched from a subscription-heavy Clover system to a no-subscription POS with built-in 4G internet. This switch improved payment speed, security, and lowered overall costs.
Tactic #3: Opt for Transparent Pricing Models
Many providers offer payment processing pricing models, including tiered, interchange-plus, and flat-rate pricing. Choosing a transparent pricing model is essential to understanding how much you're paying in fees. Interchange-plus pricing, for instance, allows you to see the exact markup applied to the interchange rate set by credit card companies. Make sure to compare costs and select a model that fits your business needs without hidden fees.
Pro Tip
A processor can manipulate any pricing plan, so choose one you like working with for the long haul. Good service is often overlooked, but it is the most important part of your decision. Ask yourself: Does your processor raise prices like clockwork every few months? Do they help you stay secure with PCI compliance? When you call for help, do they actually solve your problem or make it worse? It doesn’t have to be that way. Finding the right processor can make a big difference.
Tactic #4: Optimize Payment Acceptance Methods
Different payment types carry different costs:
Encourage ACH or bank transfers for large, recurring B2B transactions—significantly lower fees than card payments.
Promote mobile payments and QR code ordering, especially beneficial for restaurants and home service businesses, reducing transaction costs and speeding up service.
Optimizing your mix of accepted payment methods can lead directly to notable savings.
Pro Tip
Giving customers more ways to pay makes it easier for them to do business with you and makes the checkout faster. Since people always have their phones handy, offering mobile payments speeds things up. Putting QR codes on receipts or invoices helps customers pay quickly when they’re in a hurry. Faster checkout means happier customers, and your staff can spend more time giving great service. These small changes really make a big difference.
Tactic #5: Automate Compliance & Avoid Penalties
Maintaining PCI-DSS compliance is crucial for protecting your customers’ data and avoiding hefty fines, but the process can often feel complex and overwhelming. Fortunately, there are automated solutions that simplify this process. For example, PCI Concierge services—like those from Wingman Payments—automate compliance tasks, making it easy and stress-free to stay on top of requirements. These automated systems also help with early detection and prevention of chargebacks, saving your business both money and unnecessary headaches.
To further prevent chargebacks, make sure to:
Clearly communicate your refund policies to customers to set expectations.
Implement fraud detection tools to catch suspicious activity before it becomes a problem.
Always verify transaction details thoroughly to prevent errors and disputes.
Real Success Story
The Shop, a nonprofit in Cumming, Georgia, was paying $99 every month for not being PCI compliant. Karen Rivera, the director, reached out to Wingman Payments for help even though they weren’t a client yet. We helped Karen complete the tricky compliance questionnaire in just 15 minutes. That quick help saved them $1,188 a year. Being PCI compliant isn’t just about saving money—it keeps customer information safe. A data breach can shut down most businesses for good.
Wingman Payments supports clients comprehensively, ensuring secure, compliant transactions with minimal hassle.
Start Saving on Payment Processing for Small Business Today
Implementing these tactics can dramatically reduce your payment processing costs, improve operational efficiency, and enhance customer satisfaction. Ready to explore tailored solutions for your business?
Schedule your discovery call and start saving today!
