Holding the Line on Processing Costs

Keeping a handle on expenses is smart business -- and properly managing card processing costs is no exception. Consider these tips for holding the line on processing expenses:

1. Swipe whenever possible. The most cost-effective way to obtain an authorization is by swiping a customer's card. If you do have to manually enter card data (e.g., in cases where the card is damaged or demagnetized), be sure to follow all of the prompts on the payment terminal. In short, don't key-enter a transaction unless absolutely necessary.

Note that hotel, car rental and passenger transport merchants may require software applications with special terminal prompts in order to receive the best rates. The same may apply if you process a large amount of Commercial Card (Purchasing, Business and Corporate Card) transactions.

2. Accept PIN debit cards. Because they are validated in-person with a PIN, debit card transactions carry considerably less risk of fraud and, therefore, may qualify for lower processing rates.

3. Use address verification. When keying in MOTO or other card-not-present transactions, in an eCommerce setting, be sure to utilize Address Verification Service (AVS) to avoid higher rates.

4. Follow card-not-present procedures carefully. Additional information may be requested when processing mail order/telephone order (MOTO) or other card-not-present transactions. Carefully follow the prompts on the payment terminal to complete the transaction without incurring a higher rate.

5. Settle promptly. To ensure that you get the best possible rate on your daily transactions, "batch out" your electronic point-of-sale terminal promptly. Train closing and opening staff how to audit transaction totals for errors, and close out/settle daily credit card transactions at the end of each day.

Guidelines for Minimum-Amount Requirements

In an effort to manage processing expenses, some merchants establish minimum transaction amounts for credit card purchases. If you are considering such a policy, be sure to follow these rules and requirements:

  • Your minimum credit card acceptance amount cannot exceed $10. The minimum amount must be established for all credit cards, regardless of card issuer or brand. Unless you are a federal government entity or institution of higher learning, you may not establish a maximum amount as a condition for accepting a card. (With Discover® transactions, you may limit the maximum amount a Discover cardholder may spend if you have not received a positive authorization response from the issuer.)
  • Setting a minimum transaction amount for debit cards (PIN debit or non-PIN debit) is prohibited.
  • At this time, you cannot impose a surcharge or fee for accepting any card. However, you may provide a discount.
  • You may provide a discount/incentive for a consumer to pay with cash, check, credit card, debit card, etc.; however, you must clearly and conspicuously disclose the discount to consumers. Also, you must offer the discount to all consumers, and you cannot discriminate based on card brand or issuer.
  • You cannot establish any special conditions for accepting a card. For example, requesting a photo ID card at the point-of-sale is considered a special condition.