How do you avoid merchant services fees?

Avoiding merchant service fees is possible if you know where to look.

You’ve got enough money on the line; don’t pay more in merchant service fees than you absolutely have to.

Rounding it up

  • Merchant service fees are charged by payment processors as the cost of processing a transaction.
  • There are a variety of different options for how fees are structured; be sure you select the one that works for your business.
  • Negotiate your fees, understand how you’re taking payments and getting secure are just a few of the ways you can lower your fees.


Anytime you use a service, you’ve got to pay for it. This is almost always the case. In fact, if you find that you’re using a service and not paying for it, you should question how exactly that company is making money in the first place. Payment processing is no different. Everytime a customer swipes their card in your store or pushes that order button now on your website, you’re paying a fee to a number of different parties. Plus, the fees you pay can be drastically different depending on the kind of plan you have, the kind of card used, how it was used and more.

Confusing? Yes indeed. But we’ll try to make sense of it in this piece and tell you how you can avoid merchant services fees in your business transactions.

More fees?

Merchant services fees are the cost of doing business. In essence, they’re the cost for using the payment network in question. Here’s a quick rundown. 


Remember that there are three ways you might pay fees, either fixed, interchange or tiered. Fixed fees are just like they sound, a set rate per transaction, every single time. Interchange fees. Interchange fees are a bit more flexible; they’re charged by the card network and might be marked up by your payment processor. The second type is called "interchange Plus" or "Cost Plus" which is interchange, plus fees from your processor. This is the most transparent fee structure. Finally, the tiered model charges a whole myriad of different fees depending on the circumstances like type of card and how it was used.

Additional Fees:

The names to look out for on your merchant statement are:

  • Authorization fee: This is charged each time a card is swiped, regardless of if the purchase goes through
  • Transaction fee: This is the per transaction fee charged by the payment processor
  • Assessment fee: These are the fees charged by the various card networks
  • There are many negotiable fees. For a quick audit use Staitment, a software built for instant statement analysis by Swipesum.

Many processors also charge monthly or statement fees for keeping your account active or to ensure you meet a minimum number of transactions. There are also other fees like subscriptions or hardware that might not be on your statement, and are billed outside of normal payment processing in order to hide the charge from someone auditing the statements.

That’s a lot of fees

It is, which is why it's so important to avoid as many of them as you possibly can. There are a few ways you can do that. 


The companies that are charging the fees certainly don’t want you to know this but they’re almost all flexible. Negotiate! Make sure that the processors you’re working with understand the value you’re bringing with the volume of transactions you’re working with. The more transactions you bring to the table, the more money the processor makes. This makes lowering fees more palatable. 

This is the most viable option for lowering your fees in a meaningful way but unfortunately, can be the most uncomfortable. Asking for something, particularly as a small business owner, can be off putting. Ensure you get someone on the phone that is empowered to alter your fees directly. Additionally, ask them what kind of discounts or programs they have to lower fees for their customers.


Make sure you’ve got your t’s crossed when it comes to setting up your payment terminal or portal. Ensure you’re using solid technology and accepting payments properly. Make sure that you’re processing those payments quickly as well. The sooner you can batch and submit your payments, the lower the fees will likely be. Additionally, leasing your equipment directly from your payment processor can also result in lower fees.


Doing your part to fight fraud can help lower your fees considerably. Capturing the customers full name and billing address can help reduce fraud by verifying their identity. Additionally, encouraging customers to pay in person or online can help reduce your interchange fees. In-person is the most secure way, with a card swipe or dip; avoid collecting information over the phone. 

Pass it on

This can get into the weeds a bit, but you can pass those fees you pay onto your customer. While Swipesum doesn't typically suggest this option, some businesses can pass the fees on without a negative customer experience. Examples include parking tickets, gambling, and some donations. Now, the laws here are strict and can vary by state, but generally, you cannot levy a surcharge on a debit or prepaid card; credit cards are often fair game. You can also offer a slight discount for using cash as opposed to cards all together. This is often why you see all those signs saying “$5 minimum for credit transactions.”


One of the best ways to reduce your processing fees is to remove as many middle men as possible and that's exactly what ACH payments do. Using the Automated Clearing House - or ACH - system is a quick and easy way to lower your merchant processing fees because they authorize a transfer directly from your customer’s bank account to yours, with a flat .50 fee along the way. No cards, no payment networks, no gateways. This does necessitate your customer wanting to use their bank account; many businesses offer incentives for doing so, like small percentages off on purchases.


This can be hard to square, especially if you’re a small business but just like everything else, the more you use a service, the less you pay per charge. This is true of merchant fees as well. Charges and levels vary but generally speaking, if you’re processing less than one million transactions in a year, you’ll qualify for level one processing rates. Between one and say, six million might get you level two and so on. The levels also require that a certain amount of information be included with each transaction, another area where small businesses may have a hard time. This is the kind of area that SwipeSum can help you understand a bit more about the payment system and how you can benefit from volume transactions.


Getting the right payment processor for your business is crucial to lowering the fees you pay. Simply put, the needs of a Fortune 500 company are not the same as a mom and pop furniture store in beautiful downtown Crested Butte. Different payment processors will have a different take on the various fees you pay and a good one will want to work with you to find what works best for your business and theirs. 

This is confusing

It is and that’s why SwipeSum is here. We take the guesswork out of sorting out which payment processor you should use and help you avoid all sorts of fees. We even have our own proprietary reporting system called Staitment that helps you identify and reduce the fees you’re paying. Don’t worry, our pricing is transparent and right up front.

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Swipesum Team

Swipesum Team

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