Perhaps you run your own golf course and think credit card processing fees are just par for the course. You know the drill: pay 3-4% in fees on each transaction and go on with your day.
Think again. Did you know that you can completely eliminate credit card processing fees? That’s right—you don’t have to give your hard-earned dollars to a payment network and bank. You can kee 100% of your revenue. You may be thinking, So what? It’s just 3%. Why bother? In reality, learning how to offset credit card processing fees will boost your profits more than you might think. While paying 3.5% on one transaction may not seem like a lot, these fees really add up over time (we’ll show you just how much they can add up down below). Why just throw that money away? With so much competition out there—especially in the eyecare, retail, and hospitality industries—margins can already be slim. Keeping as much revenue in your business’ pockets as possible can boost your profits by more than 10%. Got your attention now? In this article, we’ll show you how to offset credit card processing fees—no matter what industry you’re in. Whether you own an eyecare clinic or food truck, you can get rid of transaction fees, earn more money, and get on a path to a better financial future.So, let’s get to it!
A quick strategy for how to offset credit card processing fees
There’s a lot of advice out there on how to offset credit card processing fees. You could do any of the following to help reduce the financial impact of transaction fees on your business:
Lower operating expenses
Increase sticker prices
Set a minimum for using a credit card
Avoid manual entering of credit card info (this leads to higher fees)
Negotiate with your credit card processor
Find a cheaper payment processor
Implement a credit surcharge program
Many of these tips are time-consuming. And, ultimately, some just work better than others. In this article, we’ll outline a two-step strategy (involving a combination of some of the above tips) to offset your credit card processing fees quickly and easily.
Why you should know how to offset credit card processing fees
We’ll let the numbers speak for themselves.Let’s say your company generates $500,000 per year in revenue. Your net margin is 10%, which is considered average for a new business. That means that you, as the owner, bring in $50,000 each year. According to data from Statista, credit cards are used for 40% of payments. That’s more than any other form of payment, including cash and debit card!
So, let’s assume that your customers’ credit card usage rates are roughly on par with the national average. In this example, that means that your business processes $200,000 in credit card payments each year. That leaves all that money subject to transaction fees. On that $200,000, you could pay as low as 1.29% or higher than 3.30% in fees, according to data from the Motley Fool. (See chart below.)
Note that this fee chart also doesn’t include the fee charged by your merchant service provider (MSP). The payment processing company charges for hardware, software, customer service, online account services, and more. Altogether, you could easily pay near 4% in average credit card processing fees. So, let’s return to the example. Let’s say you pay an average of 3.5% in fees on that $200,000 in revenue. Do the math, and you’ll see you’re paying $7,000 per year in payment processing fees. Why continue to lose out on that much money? Now, imagine what it would be like with free credit card processing. Your income would jump from $50,000 to $57,000. That’s a salary increase of 14%! And all you have to do is take the time to implement zero-cost credit card processing.
Protect your investment by eliminating credit card fees: The eyecare clinic example
If you have your own eyecare clinic, congratulations! You’ve entered a wonderful field—one that helps change people’s lives. We know you’re busy helping your patients improve their quality of life. But it’s more than worth it to spend a few minutes analyzing how your business accepts payments. Learning how to offset credit card processing fees can benefit your eyecare practice immensely. Think back to all that you’ve done to enter the eyecare field and start your own practice. You likely started with four years of undergraduate study, followed by four more years of study to become a Doctor of Optometry. In order to fund your studies, you may have worked part-time and taken out student loans (the average optometry student loan debt is $173,000).Then, after completing your studies, you invested even more time and money into starting your practice. This isn’t cheap by any means: startup costs for a private practice range from $100,000 to $1 million. And now, you’ve got ongoing expenses to manage. According to a report from CompHealth, the cost of running a small private medical practice can easily exceed $800,000 per year. Employees, especially optometrists, will cost you a lot of money. Equipment, supplies, rent, taxes, and insurance add up too. The point is this: You’ve put in too much time and capital to not make the most of your investment. If you haven’t started saving money by offsetting credit card processing fees, now is the time to do so.
A closer look at the numbers
To understand why you must offset credit card processing fees, consider this example:
Your eyecare clinic brings in $920,000 per year in revenue, but you have $800,000 in expenses. Your income is $120,000—just near the average salary for an optometrist.
While half of your revenue comes from medical insurer payments ($460,000), $300,000 of the remaining revenue comes from credit card payments. That leaves all that money subject to healthcare payment processing fees.
The average transaction fee your eyecare clinic pays is 4%. That means you pay $12,000 per year in credit card fees.
Now, imagine if you could offset or even eliminate those fees. Your income would jump from $120,000 to $132,000. That’s an increase of $12,000 per year! Just think of all that you could do with 10% more in salary. You could:
Save more for retirement
Invest back into your eyecare practice
Buy a new house
Take a luxury vacation
Put more towards your kids’ education
Looking forward to getting started? Let’s take a look at our two-step process for offsetting credit card processing fees.
Step 1: Get the best merchant service provider for your eyecare clinic, retail shop, or other business
No matter what business you run, you can’t be in business with a bad payment processor. And trust us, there are plenty of bad payment processors out there. The reality is that some merchant service providers, or MSPs, are deliberately vague and complex when structuring their fees. When shopping for an MSP, always read the fine print and make sure you’re aware of all the charges they impose, especially the following:
Interchange fee (paid to the card-issuing brand, such as JPMorgan Chase)
Network fee (paid to the payment network, such as Visa)
Assessment fee (paid to the card-issuing brand, such as American Airlines)
MSP markup (what the payment processors make from monthly fees, hardware fees, software fees, etc.)
When discussing fees with an MSP, you should have a clear idea of how much you’ll pay per transaction and per month. There should be no surprises. Another thing to remember is that these fees aren’t set in stone. While you can’t negotiate the interchange fee, network fee, or assessment fee, you can negotiate the MSP markup. For instance, we’ve seen eyecare practices get 5–10% discounts on MSP markups. This has helped these companies save thousands of dollars over the years. So, negotiate that pricing! If your business has a lot of volume and revenue, getting the MSP markup down a little shouldn’t be too difficult. While deciding on an MSP, don’t automatically opt for the cheapest one. Cheaper MSPs may not offer the quality hardware or reliable customer service you need. Go for the MSP that provides the best value: The one that offers all the services you need, as well as a good pricing structure. Once you’ve chosen the right MSP for your business, you’re ready to move on to step two.
Step 2: Implement a surcharge program
100% legal and compliant, credit surcharge programs allow businesses to accept credit card payments without having to pay fees. A surcharge solution does this by:
Having the customer cover the processing fee if using a credit card: At NadaPayments, our surcharge solution automatically adds 3.5% of the transaction’s value to the bill if the customer pays with a credit card.
Giving the customer the option to avoid a fee by paying with cash or a debit card: This makes a surcharge program a win-win for the business and the customer.
Surcharge solutions can typically be integrated into your existing credit card processing system. For instance, the NadaPayments app works seamlessly with many credit card payment processors.With no technical barriers and plenty of financial incentives, what’s holding you back?
Offset credit card processing fees today
No matter what kind of business you own, understand that you have the opportunity to increase your profits by more than 10%. All you have to do is partner with a great MSP and implement a surcharge program. At NadaPayments, we can help you begin offsetting credit card processing fees today, bringing your credit card processing bill down to “nada.” We don’t charge any setup fees and our solution works in store, online, and on the go. Want to get started? Call us at +1 (929) 293-1800 or click the link below.