For e-commerce merchants, Michael Shatz explains the inherently complex world of credit card processing. He illuminates the various players, fee structures, and common pitfalls, offering crucial advice on how to navigate these complexities and avoid common mistakes to optimize costs and profitability. This episode is a must for any online business seeking to demystify credit card fees and avoid unnecessary expenses.
Key takeaways
Don't solely choose a credit card processor based on the lowest advertised rate; thoroughly investigate the vendor, discount structure, and potential for hidden or ancillary fees.
Understand that interchange rates are the largest component of credit card processing fees (approximately 2% of a 2.5% total fee) and are non-negotiable, set by Visa and Mastercard.
Implement address verification (AVS) checks and other qualification measures to prevent interchange downgrades and keep your processing rates low.
Recognize that while interchange and assessment fees are fixed, the processing fees charged by payment processors and ISOs are negotiable and can be optimized.
If selling products with vastly different price points, consider setting up separate merchant accounts under different companies for distinct product types to potentially optimize interchange rates, after checking for applicable MCCs.
Michael Shatz is the publisher of The Merchant’s Guide, a resource to help ecommerce merchants lower their credit card fees. He joins Practical Ecommerce Publisher Kerry Murdock to discuss credit card payments and how his guide can help merchants understand credit card issues.
Frequently asked about this episode
What does this episode say about cost optimization?
Don't solely choose a credit card processor based on the lowest advertised rate; thoroughly investigate the vendor, discount structure, and potential for hidden or ancillary fees.
What does this episode say about e-commerce operations?
Understand that interchange rates are the largest component of credit card processing fees (approximately 2% of a 2.5% total fee) and are non-negotiable, set by Visa and Mastercard.
What does this episode say about payment processing?
Implement address verification (AVS) checks and other qualification measures to prevent interchange downgrades and keep your processing rates low.
What does this episode say about risk management?
Recognize that while interchange and assessment fees are fixed, the processing fees charged by payment processors and ISOs are negotiable and can be optimized.
What does this episode say about cost optimization?
If selling products with vastly different price points, consider setting up separate merchant accounts under different companies for distinct product types to potentially optimize interchange rates, after checking for applicable MCCs.
