Running a business, especially one that takes payments online, means you often use a service called a payment gateway. These services help you collect money from your customers, but they also come with fees. Understanding these fees and knowing how to talk about them can save your business a good amount of money. This guide will help you prepare and successfully negotiate for lower payment gateway fees.
Understanding Your Payment Gateway Costs
Before you can talk about lowering your costs, it’s essential to understand exactly what you are paying for and why.
What is a Payment Gateway?
Imagine your online shop needs a secure way to take money from customers. A payment gateway is like a digital cashier that handles this for you. When a customer buys something, the payment gateway securely takes their payment details, checks if the money is available, and then makes sure the funds are moved from their bank account to yours. It acts as a bridge between your business and the banks, ensuring that online transactions are safe and smooth. In the UK, payment systems and services are regulated to ensure they operate securely and fairly, often overseen by authorities such as the Financial Conduct Authority (FCA).
Different Types of Payment Costs You Might Pay
Payment gateways charge different types of fees for their services. These can vary depending on your provider and how your business operates. Here are the most common ones:
- Transaction Fees: This is usually the largest cost. You pay a small percentage or a fixed amount (or both) for every single sale you make.
- Monthly Fees: Some providers charge a regular fee just for using their service, regardless of how many sales you make.
- Setup Fees: This is a one-off cost you might pay when you first start using a new payment gateway.
- Refund Fees: If you need to give a customer their money back, some providers might charge you a small fee for processing the refund.
- Chargeback Fees: A chargeback happens when a customer disputes a payment with their bank. If this occurs, your payment gateway might charge you a fee, even if you win the dispute.
Why Saving Money on Payments Helps Your Business
Every penny saved on payment processing fees directly helps your business in several ways:
- More Profit: Lower fees mean more of the money from each sale stays with your business, increasing your overall profit.
- Better Prices for Customers: With lower costs, you might be able to offer more competitive prices, which can attract more customers.
- Investment in Growth: The money you save can be reinvested into other areas of your business, such as marketing, new products, or improving customer service, helping your business grow stronger.
Getting Ready to Talk About Fees
Preparation is key to any successful negotiation. Gathering the right information will give you confidence and strong reasons to ask for better rates.
Checking Your Payment History
Your past transaction data is your most powerful tool. You should look at:
- How many transactions you process: Count all the sales you’ve made over a period, perhaps the last six months or a year.
- Your average transaction value: What is the typical amount a customer spends with you?
- Total fees paid: Add up all the fees you’ve paid to your payment gateway over the same period. This shows how much money is at stake.
This information helps you demonstrate your value as a customer and shows how much money you could save.
Understanding Your Current Agreement
Before you speak to anyone, carefully read your existing contract with your payment gateway provider. Look for:
- Your current rates: What are you currently paying for each type of transaction?
- Any hidden fees: Are there any charges you weren’t aware of, or minimum monthly fees?
- Contract end date: When does your agreement finish? Are there any penalties if you decide to leave early?
Knowing these details will prevent any surprises and ensure you are fully informed during your discussion.
Looking at Other Payment Companies
It’s a good idea to research what other payment service providers offer. Look at their websites or contact them to find out:
- Their fee structures: What are their transaction fees, monthly fees, and other charges?
- Their features: Do they offer similar services, or perhaps even better ones, for the price?
- Customer support: How easy is it to get help if you need it?
You don’t need to name specific competitors when you negotiate, but knowing what’s available elsewhere gives you a strong bargaining position. The digital payments market in the UK is dynamic, with many regulated providers offering competitive services.
Your Plan to Get Lower Fees
Now that you’ve done your homework, it’s time to put your plan into action.
Talking to Your Current Payment Company
When you are ready, contact your payment gateway provider. It’s usually best to speak to your account manager, if you have one, or their customer service department.
- Be polite and professional: Start the conversation respectfully.
- State your intention clearly: Explain that you would like to review your current payment processing fees.
- Be prepared: Have all your research and data ready to refer to.
Explaining Why You Deserve Lower Fees
Use the information you gathered to build a strong case. Here are some common reasons that often lead to success:
- Increased Transaction Volume: If your business has grown and you are processing more sales, you are a more valuable customer.
- Long-term Customer: Loyalty can be rewarded. If you’ve been with them for a long time, remind them of this.
- Good Payment History: If you have very few chargebacks or refunds, you are a low-risk customer for them.
- Competitor Offers: You can mention that you have seen better rates from other providers (without naming them specifically).
Focus on facts and how your business benefits them.
Asking for Specific Price Cuts
Don’t just ask for “lower fees.” Be clear about what you want.
- Request a specific percentage reduction: For example, ask for your transaction fee to be reduced from 1.5% to 1.2%.
- Ask for a waiver or reduction of monthly fees: If you pay a regular monthly fee, see if they can remove or lower it.
- Enquire about tiered pricing: If your business processes a high volume of transactions, ask if they have special rates for larger businesses.
Having specific requests makes it easier for them to respond and for you to understand their offers.
What to Do if They Don’t Agree
Sometimes, your initial request might not be met. If this happens, don’t give up immediately:
- Ask for a trial period: They might offer a temporary lower rate to see how it works out.
- Seek a different account manager: If you feel you’re not getting anywhere, politely ask to speak to someone else.
- Consider switching providers: If your current provider simply won’t budge and other companies offer significantly better terms, it might be time to move. Remember, switching can take time and effort, so weigh the costs and benefits carefully.
After You’ve Agreed on New Fees
Once you’ve successfully negotiated, there are a few final steps to ensure everything goes smoothly.
Carefully Checking Your New Agreement
Do not assume everything is correct. When you receive your new contract or updated terms:
- Read every word: Make sure all the changes you agreed upon are accurately reflected in writing.
- Look for new clauses: Ensure no new fees or conditions have been added that you didn’t discuss.
- Sign only when satisfied: Do not sign anything until you are completely happy and understand all the terms.
Regulary Checking Your Payment Bills
The work doesn’t stop once you’ve signed.
- Compare new bills to the agreement: Each month, check your payment gateway statements against your new contract to ensure you are being charged the correct, lower rates.
- Question discrepancies immediately: If you spot any charges that don’t match your agreement, contact your provider right away to get them corrected.
Planning for Future Fee Talks
Negotiating fees should be an ongoing part of managing your business costs.
- Mark your calendar: Note when your contract might be up for renewal or when you plan to review your fees again.
- Keep tracking your data: Continue to monitor your transaction volume and fees paid.
- Be ready to negotiate again: As your business grows or market conditions change, you’ll be well-prepared to secure even better rates in the future.
By following this checklist, you can confidently approach your payment gateway provider and work towards securing lower fees, ultimately benefiting your business’s financial health.
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