5 tried and true ways to save on PSP fees
Fees are a fuel that makes payment infrastructure work. It is the cost of service of every participant in the transaction processing.
Most of our clients work with multiple payment providers, and paying all the fees across all the vendors ends up being pretty resource-draining. Of course, you can’t wholly avoid paying fees, but you surely can try minimising the amount you pay. In this article, we’ll tell you how to do it.
How to minimise PSP fees
Before we start sniffing out the ways to save on fees, let’s drill down to what kind of fees are there and which ones can be minimised.
PSP fees & commissions explained
You are being charged a fixed fee and a percentage of every transaction. Moreover, many providers charge a flat fee for their service regularly – monthly or annually. But, not all the amount you pay lines PSP’s pockets.
The payment fee is a complex critter. There are hundreds of fees which can be categorised by different parameters. Let’s keep it simple and boil down the fee you pay to three components:
- Interchange. It is set by payment networks, like Mastercard or Visa, and goes to the customer’s bank (issuing bank), helping it to cover the cost of servicing a customer and related risks. That’s why the amount varies considering multiple parameters, like risk level, card type, merchant’s field of activity, etc.
- Assessment fee. The amount depends on the card network and type and is paid to the payment network for assessing transaction batches.
- Provider markup. The cost of services of your payment provider, which comprises of acquiring fee, processing fee, gateway fee, and/or whatever-else fee.
Usually, the first two account for the largest share of what you pay. Unfortunately, there’s nothing you can do about it. The great news is that you still can try negotiating the third one with your payment providers, and even get certain goodies to save up.
5 ways to optimise PSP fees
1. Increase your turnover. The higher your transaction volume is, the lower the average cost can be. Many PSPs offer custom pricing and exclusive discounts for merchants having high-value or high-volume sales. Each payment service provider sets its own monthly turnover requirement merchants have to meet to get a discount.
2. Run a low-risk business. That’s not something you can opt for if you run a company that is considered high-risk, but if you’re not, chances are your PSP can charge you lower fees. Low-risk business operating in just one country and using a single currency is most likely to get a discount.
3. Eliminate chargebacks. Payment providers want to secure themselves from businesses having issues with customers. That’s why they usually charge merchants with a high chargeback ratio more for their services. Eliminating chargebacks is obviously a must for your business itself, but it also makes you more attractive for a PSP. Try to resolve customers’ requests peacefully and promptly. Make sure your client service is good enough, and your return & refund policies are simple and clear.
4. Work with multiple providers. You’ll have to make numerous integrations and bear the costs of payment gateways, but this move would most likely end up being beneficial and cost-effective. It increases your chances to get lower fees.
5. Opt for smart processing. This magical feature helps to make the most out of working with multiple payment service providers. It is a real money-saver for high-volume merchants. PayCore.io smart processing engine allows you to route each transaction most cheaply and efficiently, depending on its currency, method, bank, amount, etc. Moreover, it helps to distribute your cashflows across providers the way you need. It also drives your conversion and saves your sales, rerouting transactions to another vendor in case something goes wrong on the provider’s side. All in all, once you try smart processing tools, you’ll wonder how you ever lived without it.
Contact us to get on board and start saving on PSP fees with PayCore.io.