From the blog Bad Security Practices Can Cost You in More Ways Than One

It can be a hassle to ask a customer for lots of extra information when completing a credit card transaction. But the time you save skipping questions isn’t the extra fees you may end up paying without even realizing it. 

“Every time you accept a credit card, you pay a fee to a credit card processor,” writes Ben Dwyer with CardFellow.

According to Dwyer, interchange fees make up the largest part of your total processing fee and are non-negotiable because they are set by the banks that issue the cards to customers. 

“Every interchange category has specific requirements,” writes Dwyer. “If a transaction meets those requirements, it will be charged that category’s interchange fee. 

Factors that determine interchange category

According to Dwyer, there are a number of factors that affect what category a transaction falls into. 

Some of these factors are out of your control, such as the brand or type of card being used. But there are some factors you can control, and those have to do with how the card is processed. Understanding those factors can help save you money.

Processing Method

There are two ways a card can be processed. Card-present transactions occur when a cards information is able to be read electronically. Card-not-present refers to transactions where the credit card information is manually keyed in.

 Even if you have the physical card in front of you, it will be charged fees based on the card-not-present category if you manually key in the information. 

Card-not-present transactions have higher fees because they pose a greater risk of error or fraud.

 A recent study from the Federal Reserve reported that the amount of card-present fraud in the U.S. declined from $3.68 billion in 2015 to $2.91 billion in 2016, while the amount of card-not-present fraud jumped from $3.4 billion to $4.57 billion during the same period.

Insert or swipe cards whenever possible

When accepting cards in person, you should always try to swipe or insert the card. However, there may be times when a chip won’t read or a magnetic strip doesn’t work. In that case, manually keying in the information may be your only option. 

“The information supplied with a credit card transaction impacts how it qualifies at interchange,” writes Dwyer. “Proper and complete transaction data is especially important for businesses that process card-not-present transactions and for those that deal with corporate and government cards.”

What this means is, whether or not you’re swiping a card or entering the number manually, it’s important that you capture any data requested by your payment processor. Skipping prompted items,  such as the customer’s zip code, could result in higher fees and increase the risk of chargeback or fraud. 

Train your employees

Employee training can also play a big part in preventing extra fees. Just because you understand the importance of swiping a card whenever possible doesn’t mean your employees do. Train them to avoid entering credit card information by hand and consider a business-wide policy to cover the proper procedures if there’s no other option. 

It can be tempting to skip those extra security questions that pop up when you have an impatient customer standing in front of you. Make sure your employees understand the importance of those extra security questions and that by taking the extra few seconds to enter them, they’re ultimately saving your business money.

Also, make sure employees know to report any malfunctioning equipment immediately so technical problems can be resolved as soon as possible.

EMV chip readers

If you don’t already have one, you should consider obtaining or upgrading your POS to include an EMV chip reader.  EMV stands for Europay, Mastercard, and Visa. 

Ellen Cunningham with CardFellow writes, “EMV cards, sometimes known as ‘chip’ cards, are an advanced-security credit card designed to reduce fraud by utilizing advanced technologies to prevent counterfeiting, skimming card data, and other types of fraud.”

Using an EMV chip reader is one of the best ways to pay the lowest interchange fees. Visa recently reported a 76% drop in counterfeit fraud dollars for merchants who had completed the upgrade to an EMV chip system. 

Prevent extra fees

The best thing you can do to prevent those extra fees from piling up is to have a dependable and secure payment processor with an EMV chip reader like Talus Pay’s POS.

 With simple setup and first-class customer support, you’ll be ready to start accepting payments in just a few minutes. And our experts are only a click or phone call away to help with any payment process problems you may encounter.

Are you ready to grow together?