How to Lower Credit Card Processing Costs and Obtain Better Terms, Part 2: Attitude

This article is “Part 2” in a four-part series on how to lower your debit and credit card costs and obtain more favorable terms and conditions. “Part 1: The Basics” we published last month.

Note that this series is specific to ecommerce merchants. It can be used as a general guide by brick and mortar businesses, but there is information critical to those businesses that is not covered in this series.

Focus on Obtaining ‘Correct’ Rates

Before starting any negotiations with your current provider or seeking a new provider, you must have the right attitude. Most merchants ask for a rate review. That’s the wrong attitude. The right attitude is to require the correct pricing schedule, rates, fees, and terms, all of which I’ll address next month.

Most merchants I serve choose to renegotiate with their current provider versus seeking a new one. Many do this because of time constraints or the perceived hassle in changing providers. Some merchants choose to renegotiate because they are terrified of changing providers.

Whether you are renegotiating with your current provider or seeking a new one, you must have the attitude that there are hundreds of providers who want your business – and there are. You must demonstrate that (a) you understand the card processing business, (b) you know that you are not currently priced correctly, and (c) you deserve more favorable terms.

Don’t Worry about Providers

To help you establish the right attitude, look at the stock prices of three publicly traded merchant account providers: Tsys (TSS), Heartland Payment Systems (HPS), and EBAY, owner of PayPal, (EBAY). Note that in this economy, all of them are at or near all-time highs. If your company was publicly owned, would your stock price be at or near an all-time high? Providers make money by charging rates and fees. The more they charge the more they make. Apparently investors like the profits these companies are making. I have nothing against these three companies; I’m sure they are trying to do what’s best for their shareholders. And there are likely private providers doing even better then these companies.

My point is simply to help you get your mindset correctly before negotiating. Don’t feel sorry for any company in the card processing industry. Don’t ask to renegotiate, but instead require.

The next thing you need to understand is that no one provider offers the best solution for all merchants. Just because you have an associate using a provider for his business does not mean it is the right provider for yours. For example, I recently helped an ecommerce merchant significantly reduce his processing costs. In this case, it was best to change providers because the one he was using focused primarily on higher risk merchants. Providers that target higher risk merchants generally demand higher margins because of the risk they incur. My client was not higher risk and was better served by a provider tailored to his business needs.

Be Wary of Endorsements

Be cautious with any association, company, merchant, or person that endorses a specific provider. Again, no one provider is the best choice for all merchants. In this industry, if any entity or person is endorsing a provider, it is likely being paid behind the scenes for that endorsement.

Lastly, understand that the credit card processing industry is changing. Have the attitude and understanding that the provider you are using today may not be your best provider two years from now. Moreover, the industry continues to consolidate. So the provider you use today may not be your provider in the future. For these and other reasons, do not just focus on cost but also fully understand the terms and conditions.


  1. Attitude is critical when negotiating costs and terms.
  2. Don’t ask. Instead, require the correct rates, fees, and terms.
  3. No one provider offers the best solution for every merchant.
  4. Be careful of endorsements.
  5. Understand the industry is changing, which may impact your future choice of providers.

In “Part 3: Preparation,” the next installment, I’ll address how to prepare to negotiate with your current and prospective providers.

Phil Hinke
Phil Hinke
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