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How to Negotiate Credit Card Processing Fees: A Guide from ModPay Solutions

Updated: Nov 8, 2023

Credit card processing fees are a necessary cost for businesses that accept card transactions, but these fees aren't set in stone. There are ways for merchants to negotiate credit card processing fees, reduce costs, and possibly eliminate fees altogether.

In this blog post, we've compiled a comprehensive guide on how to negotiate credit card processing fees. At ModPay Solutions, we believe in empowering business owners with the knowledge and tools they need to succeed. Read on for valuable tips that can help you save significantly.

How to Negotiate Credit Card Processing Fees: A Guide from ModPay Solutions

Table of Contents:

  1. Defining Credit Card Processing Fees

  2. Card Processing Fees Explained

  3. How to Negotiate Your Business' Credit Card Processing Fees

  4. Understand How Payment Processing Works

  5. Gather Data and Compare Providers

  6. Ask for a Rate Review

  7. Negotiate Other Fees

  8. Consider Switching Providers

  9. Conclusion

People Also Ask:

Can I negotiate credit card fees?

Negotiating credit card processing fees might seem intimidating, but having that conversation can lead to some serious savings.

As long as you know what you're negotiating and understand the process, you're good to go. Let's get those fees down!

Why are card processing fees so high?

Credit card companies charge a percentage to accept payments from customers on their network because, well, that's how they make money.

This fee, also known as the merchant discount rate (MDR), usually ranges from 2-3%, but sometimes it can go as high as 5%.

Defining Credit Card Processing Fees

Understanding credit card processing fees is crucial for any business with credit and debit cards. These fees, also known as merchant or card processing fees, are often considered an insatiable aspect of running a modern business.

Why? Because traditional card processing fees are designed to cover the cost of providing electronic payment services, from transaction processing to fraud protection.

The fees can vary depending on factors such as card type and transaction volume. However, they generally include a percentage of the transaction amount and a flat fee for each transaction.

While card processing is essential for modern commerce, knowing the different types of fees charged, such as interchange fees, processing fees, and equipment fees, can help provide you with possible options.

By having a clear understanding of these fees, you can not only negotiate with payment processors but also seek out alternative payment solutions if need be, resulting in making better decisions to help your business thrive.

Card Processing Fees Explained

At first glance, card processing fees can seem overwhelming. However, understanding the breakdown of these fees can help you make more informed decisions about payment processing options for your business. In general, card processing fees consist of interchange fees, transaction fees, service fees, and equipment fees.

The card-issuing bank charges interchange fees and makes up the majority of processing fees. Transaction fees are based on the number of transactions processed by your business. Meanwhile, service fees may include monthly charges for processing and account maintenance, while equipment fees cover the costs of necessary payment processing tools.

It's also worth noting that processing fees are typically calculated as a percentage (1.5% to 3.5%) of each transaction, making it essential to consider your average transaction size.

By taking a closer look at these fees, you can better understand the total costs associated with card processing and make the necessary decisions on how to negotiate or cut these costs altogether.

How to Negotiate Your Business' Credit Card Processing Fees

Credit card processing fees are an inevitable part of running a business. They cut into your profits but are necessary to accept credit card payments.

Fortunately, there are ways to negotiate these fees to ensure you pay the right amount for merchant services.

Understand How Payment Processing Works

Before you can negotiate your credit card processing fees, it's vital to understand how payment processing works. Several players are involved, including the acquiring bank, the payment processor, the credit card network, and the issuing bank.

Each of these players takes a fee for their services. The interchange fee, set by the credit card network, is usually non-negotiable. However, other fees, such as the payment gateway fee and the processor markup, can be negotiated.

Understanding the different fees involved will give you leverage in negotiations.

Gather Data and Compare Providers

To negotiate effectively, you need to have data to back up your claims. Gather statements from your current provider and compare their rates to other payment processors in the market.

Look for providers that offer lower fees, better payment options, and even possible alternatives to eliminate fees. Speak to merchant services consultants who can help you understand the different pricing models and which works best for your business.

Ask for a Rate Review

Once you have a good understanding of your current fees and the market rates, you can approach your current provider and ask for a rate review. Explain that you have found better rates with other providers and ask if they can match or beat those rates.

Most providers would rather keep a current customer than lose them to a competitor.

Negotiate Other Fees

If your current provider is unwilling to reduce your processing rate, you can still negotiate other fees, such as the payment gateway fee and the statement fee. These fees are usually more flexible and can be negotiated case-by-case.

Ask for a lower fee or for them to waive the fee altogether.

Consider Switching Providers

If you've tried negotiating with your current provider and you're still paying high fees, it may be time to switch providers. Look for providers that offer lower rates, better payment options, and excellent customer service. Make sure you read the fine print, understand any termination fees, and get all agreements in writing.

The great thing about today's competitive merchant service marketplace is that there are providers who offer alternative solutions to traditional processing fees. This means that processors like ModPay Solutions provide innovative processing options designed to help eliminate costly credit card processing fees.


Negotiating credit card processing fees can be intimidating, but it's a necessary step to ensure your business is not overpaying for merchant services. At ModPay Solutions, we understand the importance of fair and transparent pricing. That's why we offer customized pricing plans, excellent customer support, and state-of-the-art payment solutions.

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