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How to save money on merchant fees

Ola Polczynski
31 October - 3 min read

Paying merchant fees might seem like the simple cost of doing business, but with the recent surge in contactless payments, it has become an unavoidable, and often an excessive cost for businesses. In fact, it was reported that in the past year Australian businesses have paid an estimated $4 billion in merchant fees, with many seeking reliefs from high fees.

In this article we cover some of the things your business should look out for and consider when selecting the right merchant service provider and offer tips on how you can save money on fees.

What is a merchant service and merchant service provider?

A merchant service refers to the technology required to process a digital transaction. This facility, in the form of a merchant account, is offered to the seller by a third-party payment processor – the merchant service provider – who acts like the middleman between the parties involved in the sale – the business, the customer and the bank. They provide the infrastructure which enables businesses to accept digital payments quickly and securely. 

What are merchant fees and how much should I be paying?

To accept payments, merchant fees, or the transaction fees that the business must pay whenever a customer uses a debit or credit card to make a purchase, are applicable. This cost will vary between providers, but according to the ACCC the fees should sit between 0.5-2% of the transaction value and are dependent on the payment type.

Other costs to factor in might include:

  • Merchant account setup costs
  • Monthly fees
  • Payment gateway setup 
  • Compliance checks and fraud prevention fees
  • EFTPOS terminal rental fees

Always check with your provider to ensure you understand all the costs associated with your merchant account.

Where you can save some money

The key to saving money on merchant fees is to shop around. A few ways to save money can include:

  • On-charge your fees: Find a provider that allows you to pass the fees onto the customers with auto on-charge functionality whereby the fee is simply added onto each sale, meaning you pay 0%.
  • Ask about least-cost routing: Check you have the option to choose which network you send your card payments through, to find the least expensive option.
  • Check for free services:  Some payment providers will offer freebies if you use their payments platform in the form of complimentary set up, implementation or software fees. If they are not forthcoming with it, it is always worth asking!
  • Negotiate a better deal:  Do not simply accept the first rate you are given, as depending on your monthly payment volume, you might be able to receive a better rate. You may also be able to negotiate a competitive rate by bundling your in-store and online sales transactions. Get some quotes and if your current provider cannot match them, make the switch.

How can we help?

With Spenda’s merchant services solution, your business can seamlessly accept payments, maximise conversions and never miss a sale. 

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Ola Polczynski