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Credit Card Processing Overpayments
Tips to Avoid Them
By Emily Shap

Credit card processing is just like any other business cost incurred by business owners, in order to stop over payments, you must take the time to look closely, ask questions, and make changes. Many over payments can be avoided with the simple knowledge of understanding why they occur in the first place. Here is a look at some top reasons why merchants over pay in credit card processing.

Statements
Taking the time to read and understand your credit card processing statements is a must. Scanning your monthly statements may be the last thing you want to do, but they relay a lot of important information: monthly processing costs, downgrades, and account updates. Statement updates inform business owners of rate increases, regulatory issues, and other information regarding their merchant accounts. If you are not closely monitoring your merchant account statement, your processing rates could increase, or you could be paying a non-compliance fee, without your knowledge.

If you do not understand your credit card processing statement, call your merchant account provider and ask them to explain it. Reputable processors will be more than happy to explain their statements to you. If they are not, find a new one.

Downgrades
Credit card processing downgrades can occur for a variety of reasons: card-not-present transactions, certain reward cards, and improper operations. Some downgrades can’t be controlled, but others like improper operations can. Knowing what these errors are can reduce over payments. For example, failure to batch close all authorized transactions will cause the whole batch to downgrade to non-qualified status. Other common causes of downgrades include: keying-in a credit card, instead of swiping it in the credit card terminal, and not using AVS (address verification system) on card-not-present transactions. Look at your processing statement to stay abreast of operational errors that cause downgrades.

Comparing Merchant Account Pricing
Merchants who have been with the same processor for a number of years, and have not compared pricing should do so. Merchant account degradation can occur when rates have increased, or the account has not been updated to reflect current processing trends. Take the time to compare merchant account pricing with one, or two other reputable processors. Once you have some numbers to work with, negotiate lower pricing and reduce fees. Many times a simple update to your account could lower credit card processing fees.

Sales Tax Write-Off
The credit card processing amount paid on sales tax is a write-off for merchants. This can equate to a substantial amount at the end of the year, especially for retail merchants. Most tax professionals are aware of this processing write-off, but for those of you preparing your own taxes, seeking advice from a consultant could reduce over payments

Eliminating unnecessary credit card processing over payments is something every business owner wants, they just not be aware that the over payments are happening in the first place. Taking the time to look at processing statements every month is a good start. Ask your credit card processor for assistance if you have any questions. Avoid operational errors that are costing you money, compare pricing on a regular basis, and write-off those processing fees applied to sales tax!