Payment processing fees and operational costs are a ubiquitous part of running a business. Entrepreneurs are trying to make money, but so are the companies that help them with accepting and managing money, communicating with others, their suppliers, their shippers, and more. Sometimes the fees involved from working with partners are unforeseen are higher than they need to be, so here are some ways business owners can cut costs without sacrificing integrity or customer loyalty.
Minimizing payment processing fees
Negotiating: Not many transactions are cash-based nowadays, but credit card payments often require third-party verifiers that charge fees for their services. That’s the thing, though: if someone is performing a service (even if they are using automatic software to do it), they are a merchant—and merchants want business.
Executive Director of Total Apps, Rey Pasinli, says that it is possible to negotiate with credit card processors for lower rates: “Processors, just like any other business, can negotiate with their suppliers off of the volume of processing their clients compete. The more you give them, the more negotiating power they have upstream to lower their overhead in different areas. IN turn, they can lower your rates if that is worthwhile to them.”
It never hurts to ask if a merchant is willing to reduce fees. Entrepreneurs will need to leverage what they can and convince their processors why lower rates are beneficial for the other party, but the worst they can do is say no, and the best thing that can happen outweighs the negative.
Payment options: Business owners should also be wary of what kind of payments they accept. They should always offer more than one, but there are sometimes ineffective avenues. Vantiv recommends that people eliminate unnecessary telephone or hand-key order transactions:
“These types of transactions are card not present (CNP) transactions, which also are considered higher risk by issuing banks and the card associations. As a result, they’re subject to higher processing rates. You can save on related transaction fees when you reduce telephone or hand-key transactions that aren’t necessary.”
What payment methods can entrepreneurs substitute with, though? Do people pay with things other than cash, debit, or credit cards? Many people do if they have the option. Businesses would be wise to accept payments via cryptocurrency (like Bitcoin) or wire transfers from people who are hesitant to share too much personal information when purchasing e-commerce goods. Electronic checks are an option as well, such as those from Deluxe eChecks, which are emailable and cannot be lost in the mail. Another workaround would be a wide-ranging online payment solution that provides businesses and customers with the best payment experience from end to end. Learn more at Xpress-pay.
Reducing operational costs
Automation: Thanks to advancing technology, it is possible to automate many outdated processes. Businesses can redirect manual labor and resources to other tasks and avoid tedium. Canadian airline Canadian North, for example, employed EchoVera’s AP Automation solution that automated its supplier invoicing process. Canadian North pays suppliers around $300 million per year, but EchoVera helped them realize “significant visibility and measurable cost savings.”
What other processes are automatable? Cflow recommends a few, including sales/CRM, ticketing (for businesses that specialize in events), assigning tasks, and leave and expense approvals. Marking and nurturing leads is a time-consuming process, but technology can pinpoint patterns and connect with potential customers without employees sifting through endless lists. Likewise, expense approvals require specific conditions, but new systems can do this work more quickly than human workers.
There are other possibilities, so individual businesses should assess their own inefficiencies and determine where their focus is better spent. If automation makes employees lives easier, improves the customer experience, and increases chances of ROI, it is worthwhile—but if businesses attempt to automate something solely for the sake of it, the endeavor may backfire.
Reducing carbon footprint: Regardless of a business’s type, going green is always a good idea. Not only is it environmentally friendly (which companies can take pride in and advertise to their customers), it can save a dramatic amount of money in the long run. Office spaces that use less energy have smaller bills, so replacing traditional lighting with compact fluorescent light bulbs, improving insulation and window quality to cut back on air conditioning costs, and reducing physical waste are excellent places to start.
For entrepreneurs that do not need an office, telecommuting is cheaper than paying for unnecessary space. Modern connectivity enables people to perform certain jobs from anywhere. Even if business owners do need a physical space, it’s possible their employees do not, so that space can afford to be smaller.
Every business wants to save money on operations and payment processing costs. New technologies can turn wishful thinking into reality, offering fresh options and modernizing old ones.