8 Methods to Reduce Payment Acceptance Fees

Options for Canadian Merchants to Reduce Payment Processing Fees

For Canadian merchants, payment processing fees can represent a significant cost burden, cutting into profit margins. However, there are several strategies that can be employed to reduce these fees, offering merchants the opportunity to save money while still providing seamless payment experiences to customers. Below are some practical options for Canadian merchants to consider:

1. Encourage the Use of Debit Cards

Debit cards generally come with lower transaction fees compared to credit cards. By promoting debit card payments, merchants can save on processing costs while still offering a convenient payment option to customers. Here’s how merchants can do this:

• Offer Discounts for Debit Payments: Provide a small discount to customers who opt to pay with their debit card instead of a credit card.

• Educate Customers: Merchants can raise awareness about the savings that debit payments offer and encourage customers to adopt them as their preferred method of payment.

2. Promote Alternative Payment Methods with Lower Fees

Beyond traditional credit and debit card payments, merchants can explore other electronic payment options that come with lower fees. Some alternatives include:

• Interac e-Transfer: Interac e-Transfers are widely used in Canada and offer a low-cost method for sending and receiving payments. They are a secure and trusted option with relatively low fees compared to credit card processing.

• Electronic Fund Transfers (EFT): EFT payments allow for direct transfers between bank accounts, often at a lower cost than card-based transactions. Merchants can promote this as an option for higher-ticket items or repeat customers.

3. Implement surcharging

Surcharging customers for paying with a credit card has been in use for decades. Only recently has this practice grown in popularity spawned by years of payment cost increases. This option allows merchants to pass up to 3% of the processing fee cost on to the consumer at time of transaction. However, surcharging brings with it a range of other challenges that most businesses are not ready for.

4. Negotiate Lower Processing Rates with Payment Processors

Merchants often accept the standard rates offered by their payment processors, but these rates are not set in stone. Negotiation is key, particularly for businesses with a high volume of transactions:

• Leverage Transaction Volume: Merchants who process a large number of transactions can use their volume as leverage to negotiate lower fees with their payment processors.

• Commit to Longer-Term Contracts: In exchange for agreeing to a longer contract term, payment processors may be willing to reduce transaction fees or offer better terms.

5. Advocate for Fair and Transparent Processing Fees

Merchants can band together to advocate for a more competitive and transparent payments industry, which could lead to lower processing fees:

• Engage in Advocacy Efforts: Canadian merchants can join industry associations or advocacy groups that push for regulation of payment processing fees. The Canadian government has shown interest in regulating retail payment activities to promote fair competition and reduce costs for businesses.

• Monitor Government Initiatives: Stay informed about any governmental regulations aimed at capping fees or increasing transparency in payment processing.

6. Consider Membership in the Canadian Federation of Independent Businesses (CFIB)

The Canadian Federation of Independent Businesses (CFIB) actively works to reduce the financial burdens faced by small and medium-sized businesses, including advocating for lower payment processing fees.

CFIB’s Advocacy: As a CFIB member, merchants gain access to lobbying efforts aimed at reducing fees. They also get guidance on how to navigate the payment processing system, potentially gaining direct access to the payment system and bypassing intermediaries who charge fees.

7. Stay Informed About Industry Trends and Emerging Technologies

The payments industry is rapidly evolving, and new technologies and fee structures are continuously emerging. By staying updated on these trends, merchants can identify opportunities to save on payment processing fees:

• Innovative Payment Solutions: Keep an eye out for new payment technologies, such as blockchain-based payments or digital wallets that may offer lower fees.

• Best Practices: Regularly reviewing industry best practices can help merchants adopt efficient systems that reduce processing time and costs, contributing to overall savings.

8. Work with a Payments Expert

Working with a company or individual that is well versed in the payments ecosystem can help provide detailed and business specific insights to help you uncover opportunities to reduce your payment costs. Expense Defence has Certified Payment Professionals on staff and ready to help you optimize your payments strategy, pricing, and ecosystem.

Reducing payment processing fees is crucial for Canadian merchants aiming to protect their bottom line. Whether through promoting low-cost payment methods like debit cards, negotiating better rates with processors, or staying up-to-date on industry innovations, there are several avenues to explore. By employing one or more of these strategies, merchants can lower their fees, improve profitability, and continue offering flexible payment options to their customers.