11 Ways to Lower Your Merchant Fees In 2025 & Save More

You can lower merchant fees by choosing the right strategies and tools. In this blog, we’ll share proven tactics like selecting processor-agnostic POS systems, embracing transparent pricing models, and negotiating better rates to slash costs.

Get ready for a practical guide packed with actionable tips to save money and boost your bottom line. Let’s dive into eleven simple tips for lowering your credit card processing fees in 2025.

What Are Merchant Fees?

Merchant fees are charges that small businesses pay to process customer card payments. These fees cover the costs of services provided by banks, card networks like Visa or Mastercard, and payment processors.

They usually range from 1.5% to 3.5% per transaction, plus a flat fee, like $0.10-$0.30. Fees vary based on the card type, transaction size, and your processor’s pricing model.

Negotiating with processors or choosing flat-rate plans can help manage costs. Always review contracts carefully.

11 Ways to Reduce Merchant Fees (+ Actionable Tips)

1. Monitor and Audit Statements Monthly

The first step in reducing your credit card processing fees is knowing exactly what you’re paying for. Processor statements are complex, and hidden costs can sneak in. Set aside time each month to review your statement line by line.

Look for unexpected charges like “compliance fees” or inflated interchange rates. Use a tool like CardFellow to analyze statements for free. If you spot issues, call your processor immediately. Regular audits keep processors honest and save you money. Check out the following guide for some of the cheapest credit card processing solutions.

Action Step:

• Request a detailed breakdown of your fees from your processor.
• Look for hidden or unnecessary charges that may be increasing your costs.

2. Compare Offers from Several Payment Processors

Shopping around for payment processors is one of the most effective ways to lower merchant fees. By getting quotes from multiple providers, you gain leverage to negotiate better rates and find a processor that fits your business needs.

Look for well-known players like Square, Stripe, or PayPal, but also check smaller, specialized processors like Dharma Merchant Services or Payment Depot, which often cater to retail. Look at our Clover vs. Square fees list to see how these two processors compare.

Action Step:

Start by contacting at least three to five processors.

• Provide details about your average transaction size, monthly volume, and whether you process in-store, online, or both.
• Ask for a detailed breakdown of fees, including interchange, assessment, and any monthly or hidden charges.
• Compare credit card processing rates with a comparison tool like CardFellow to streamline the process and ensure transparency.

3. Don’t Combine Your Processor With Your Point of Sale Provider or Bank

Many POS solutions also include a processing agreement. Point of sale solutions that come with a processing agreement leave businesses with no choice for processing agreements. The rates are fixed, and the lack of choice means less room for negotiation.

Moreover, they often keep businesses bound to long-term contracts through their processing services. The POS software may not have any binding agreement, but SMBs are still stuck in an unfavorable position if the processing does.

Banks, too, cannot provide the lowest processing rates. Usually, banks outsource the processing to third parties. Keep it simple by working directly with your merchant service provider.

If you’re looking for processing-agnostic POS systems, check out our guide about the best POS system without changing credit card processing requirements.

Action Step:

• Research and choose a POS system that allows for multiple processor integrations.
• Compare payment processors independently to find the best rates, ensuring your POS system can easily integrate with any chosen provider.
• Regularly review your payment processor contracts and rates to ensure you get the best possible deal without changing your POS setup.

4. Avoid Manual Entry Transactions

Manually keyed-in transactions, also known as card-not-present transactions (like phone or online orders), carry higher fees because they’re riskier for fraud. Train staff to always swipe, dip, or tap cards when possible. If you take phone orders, invest in a virtual terminal that supports card-present transactions via a reader. This small change can drop your fees significantly over time. Also, certain types of cards, such as premium or rewards cards, come with higher interchange fees.

Action Step:

• Encourage customers to use debit cards or card-present payment methods when possible.
• Offer incentives for in-person payments or for using lower-fee payment methods.

5. Deal Without Third-Party Involvement

Third-party providers, like payment aggregators or independent sales organizations (ISOs), often act as middlemen between you and the actual payment processor. Bypassing these third parties and working directly with a processor or bank can significantly reduce merchant fees.

Action Step:

• Check your merchant statement or contract to identify whether you use a third party.
• If you’re with one, research processors that offer direct merchant accounts, such as Chase Merchant Services, Wells Fargo, or Elavon.
• Contact them to set up a direct account.

6. Reduce Chargebacks and Fraud

Every business must take precautionary measures against retail fraud. Chargebacks can significantly increase your processing fees and damage your relationship with your payment processor. Below are some fraud protection methods to highlight when negotiating your rates:

• Follow all PCI Compliance rules
• Require a CVV with every card-not-present (CNP) purchase
• Keep purchase histories for an extended period and save receipts
• Require signatures for delivered orders
• Enter the ZIP code for the billing address
• Avoid keyed transactions
• Make return policies clear
• Get EMV card readers and eliminate all swiped transactions

Action Step:

• Invest in fraud prevention tools and educate staff on chargeback prevention.
• Monitor chargeback reports regularly to identify trends and address issues promptly.

Action Step:

• Research PayFac and ISO processor options to see if switching could save you money.
• Promote the use of digital wallets and contactless payments to lower transaction costs.

7. Consolidate Payment Processing Services

If you use different vendors for online payments, in-store payments, and other types of transactions, you may incur additional fees. Consolidating all your payment processing needs under a single provider can streamline your services and reduce fees.

For example, when you use a single provider for both online and in-person payments, you may be able to negotiate volume discounts. Additionally, integrated systems simplify reporting, reconciliation, and customer service interactions, saving you time and reducing errors.

Action Step:

• Look for payment processors that offer both online and offline solutions to consolidate your services. You need a POS credit card processing system that accepts online and in-store credit card payments.
• Compare the costs of consolidating services with a single provider vs. multiple vendors.

8. Avoid Long-Term Contracts With Early Termination Fees

Many payment processors try to lock merchants into long-term contracts with hefty early termination fees. More payment providers offer month-to-month contracts with no termination fees, giving you more flexibility.

Avoid signing long-term contracts unless you are confident that the provider offers the best possible rates and services. Early termination fees can be a significant burden if you find a better deal elsewhere or if your business needs to change.

Action Step:

• Choose a processor with flexible, month-to-month contracts.
• If you’re in a contract, check your termination fees and consider switching when the contract ends.

9. Regularly Review Your Statements

Processing fees can fluctuate over time, so it’s important to regularly review your statements and keep track of any fee increases. Some processors may add or adjust new fees without clearly notifying you, leading to unexpected cost increases.

By reviewing your statements every month, you can catch these changes early and take action to avoid overpaying. You can also spot fraudulent or erroneous charges, which can add up over time if not addressed.

Action Step:

• Set aside time each month to review your processing statements.
• Reach out to your processor if you notice any discrepancies or sudden increases.

10. Implement Surcharging (Where Legal) or Cash Discount Program

Surcharging lets you pass credit card fees to customers. It’s legal in most U.S. states, but rules vary. You can add a small fee (up to 4%) at checkout for credit card users. Be transparent—display signs and inform customers upfront. This won’t work for every business, but it’s a direct way to offset fees. Check local laws and card network rules before starting.

Action Step:

• Research local laws regarding surcharges and cash discount programs.
• Clearly communicate any surcharges or discounts to customers to avoid confusion.

11. Batch Transactions Daily

Batching is when you settle all transactions at the end of the day. Failing to batch daily can trigger higher fees or downgrades to costlier interchange rates. Set your POS system to auto-batch every 24 hours. If you process manually, make it a nightly routine. This simple habit keeps your transactions in the lowest fee category.

In order to complete this, you must manually tell your POS system payment terminal to complete the task or set it up to be done manually. Manual batching is better since it can be timed to be done each night and leaves less room for human error.

Ensure your point of sale can be set to complete batching automatically. Not only will you receive cash for your sales more quickly, but more frequent settling of credit cards will lower your processing rates.

Action Step:

• Set your POS system to automatically settle or batch transactions at each business day’s end.
• If you prefer manual batching, ensure it’s done consistently at the same time each day to avoid errors and delays.
• Monitor your settlement schedule regularly to ensure that transactions are processed on time, reducing your processing rates and ensuring timely payments.

Glossary of Terms For Credit Card Processing

Simply put, there are a bunch. For a more detailed look, check out our blog on how credit card processing works. But let’s summarize a few of the major contributors below:

• Assessment Fees: The credit card company sets these fees, which vary slightly within each network. They are also typically slightly higher for credit transactions than debit transactions. Assessment fees also include a fixed monthly network rate as a sort of subscription fee.

• Interchange Fees: Your interchange rate is the most of your total fee paid for each transaction. These vary the most and can be reduced (though never eliminated) by strict credit card policies. Some factors that determine interchange rates include cards present/not present, high-rewards cards, business or corporate cards, and keyed/swiped/inserted transactions. These rates vary between networks, but oversight committees are cracking down on outrageous rates worldwide. The EU recently issued broad caps on interchange rates set by the major card networks.

• Processor Fees: Of course, the merchant service provider must also receive compensation for its role in this process. This rate varies between companies and can be negotiable based on transaction volume and business security/fraud protection measures. More on that below.

• Merchant Account: A special bank account that enables businesses to accept credit card payments. It acts as an intermediary between the merchant and the card networks, ensuring that funds from customer transactions are securely transferred to the merchant’s bank.

• Payment Gateway: A technology that securely transmits credit card information from a merchant’s website to the credit card processor. It bridges the point of sale and the payment processor, ensuring transaction data is encrypted and transferred safely.

• Batching: Batching is the process of grouping all completed credit card transactions from a specific period (usually a day) and submitting them to the payment processor for settlement. It helps merchants receive funds efficiently and ensures accurate processing.

• Chargeback: A reversal of a credit card transaction initiated by the cardholder or issuing bank due to disputes such as fraud, product issues, or billing errors. Merchants may face penalties or fees when chargebacks occur and must provide evidence to contest them.

• PCI Compliance: Short for Payment Card Industry Data Security Standards (PCI DSS), PCI compliance refers to a set of regulations that businesses must follow to handle, process, and store credit card data securely, reducing the risk of fraud and data breaches.

• Credit Card Terminal: A physical device used by merchants to accept credit and debit card payments. Modern terminals often support multiple payment methods, including chip cards, magnetic stripes, and contactless (NFC) payments like mobile wallets.

• NFC (Near Field Communication): NFC is a wireless technology that allows short-range communication between devices, such as mobile phones and payment terminals. It is commonly used for contactless payments, where customers can tap their card or phone to complete a transaction.

Credit Card Processing Fees of Major Credit Card Networks

Is it Possible to Get Rid of Credit Card Processing Fees Completely?

Getting rid of credit card processing fees entirely is generally impossible for most businesses that accept credit card payments. However, some strategies can help minimize these fees:

• Surcharge programs (with limitations): With these, you pass the processing fee onto the customer who chooses credit cards. This can incentivize cash payments but requires compliance with regulations and may not be popular with all customers.

• Offer cash discounts: Instead of surcharging credit card users, businesses can offer discounts to customers who pay with cash or debit cards, which typically have lower processing fees.

• Negotiate with processors: Businesses can negotiate with credit card processing companies for lower rates, especially if they have a strong sales volume or are willing to commit to a long-term contract.

• Choose the right processor: Research and compare different processors to find one that offers competitive rates and transparent fee structures. Nowadays, most retail POS systems provide their payment processors. However, a few POS solutions, like KORONA POS, are processing-agnostic, meaning they can integrate with any payment processing solution.

Frequently Asked Questions: Reducing credit card processing fees

How to Find the Best Payment Processor for Your Needs

Choosing the best payment processor for small business owners, such as retailers, restaurants, and quick-service restaurant (QSR) owners, requires careful consideration of several factors. First, evaluate transaction fees, including per-transaction and monthly fees, to ensure affordability, as these can significantly impact profit margins.

Look for processors offering transparent pricing without hidden costs. Second, prioritize compatibility with your existing point of sale systems and eCommerce platforms for seamless integration.

Third, consider the processor’s support for diverse payment methods, such as credit/debit cards, mobile payments (Apple Pay, Google Pay), and contactless options, to cater to customer preferences. Reliability and fast transaction processing are critical, especially for QSRs where speed is essential.

Check for robust security features, like PCI compliance and fraud protection, to safeguard customer data. Customer support availability (24/7) is vital for resolving issues quickly.

Before deciding, compare at least three processors, read user reviews, and test their customer service responsiveness. Ensure the processor scales with your business growth.

Reduce Your Payment Costs with KORONA POS’s Transparent Pricing

Reducing credit card processing fees in 2025 requires a proactive approach. You can significantly lower your costs by understanding your fees, negotiating with processors, optimizing transaction methods, and using the latest payment technology.

Unlike many POS systems, KORONA is payment processor-agnostic, enabling businesses to choose or retain their preferred credit card processor, shop for competitive rates, and avoid vendor lock-in. With no setup fees, surcharges, or long-term commitments, and a 60-day money-back guarantee, KORONA ensures cost predictability. Additionally, it provides 24/7 support and free trials that help businesses optimize operations without unexpected expenses.

KORONA POS can also help you choose the right pos payment processor for your business. Click below to get in touch with one of our product specialists.