American businesses typically pay merchant fees of up to 5 percent on every credit card transaction they make, notes the U.S. Small Business Administration. With credit card purchases accounting for between 65 to 100 percent of any local business’s sales according to Business Know-How, merchant fees can easily take thousands of dollars from any company’s budget. Merchant fees are an inevitable reality for all modern businesses, but you can reduce these charges with a few simple strategies.

Compare Merchant Fees From Different Payment Processors

Image via Flickr by frankieleon

Fees vary between different payment processors, so it’s important to do your research. Learn about the processing fees several payment processors will charge your business before deciding which one deserves your business.

Small businesses with limited budgets are nurtured by many payment processors, according to the U.S. Small Business Administration. It notes payment processors catering primarily for small businesses often have reduced merchant fees ranging from 0 percent to 0.36 percent. These charges are well below the average of between 0.41 percent to 2.19 percent.

In addition, many payment processors charge so-called “high risk” businesses — including online casinos, adult entertainment establishments, travel agencies, and weight loss programs — higher fees. That’s because financial firms believe the products and services high-risk companies offer carry a higher theft risk. However, High Risk Pay specializes in opening accounts for companies often penalized by traditional payment processors. It charges fees similar to those available for more conventional companies.

Avoid Manual Processing Where Possible

Transactions where you enter your cardholder’s information without having the card present carry greater merchant fees than swipe and tap transactions. That’s because manually entered transactions are more vulnerable to fraud. Thieves can obtain credit card numbers and make fraudulent transactions online and over the phone. Without interacting with the credit card itself, you’re also not benefiting from the card’s inbuilt security features.

Brick-and-mortar stores should make in-person swipe and tap transactions the norm. Online businesses may try to deter customers from using their credit cards. For example, they may add the merchant fees to credit card transactions but not direct deposit and e-wallet transactions.

Improve Your Business’s Credit Score

Generally speaking, the higher your business’s credit score, the lower your merchant fees. You can improve your company’s creditworthiness in numerous ways. Make payments on time and strive to repay all your debts. Think carefully about opening new accounts, as each one will slightly reduce your credit score. Don’t close your old accounts, though. So long as they’re kept in good order, they’re helping your credit score.

You should aim for a credit score of between 730 and 850, which Entrepreneur claims puts you in the excellent range. There are several ways to check your credit score, but the government’s Annual Credit Report — which offers a free credit report every year — is one of the best.

No business can afford to spend more on merchant fees than they have to. Do your research, put some strategies in place to slash the fees, and improve your business’s bottom line.