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Bank of America lists 5 strategies to reduce credit, debit processing fees

January 24, 2012

A variety of factors affect the fees associated with card acceptance. By effectively managing factors you can control, you can help minimize transactions with higher than usual fees assessed — ultimately reducing your monthly processing expense. 

1) Settle transactions in a timely manner.
If you usually settle transactions more than 24 hours after they are authorized, the fee rate could be higher. What you can do: Ensure your terminal is set up to settle card transactions automatically at the end of your business day.

2) Accept PIN-debit transactions at the point of sale.
Fees for credit and signature debit card transactions over $40 are usually higher than those for debit (non-signature) transactions. By enabling your customers to enter their PINs when paying with debit cards, you may be able to reduce your cost on these transactions. What you can do: Make sure your terminal has an internal or handheld PIN-pad.

3) Capture card numbers by swiping them through a card reader.
When customers present their cards in person, using a keypad to enter the card information can lead to higher fees because hand-keyed information is more likely to be entered incorrectly and has a higher potential for fraud.  What you can do: Clean card readers regularly so they capture all magnetic stripe information. One way to do this is to wrap a dollar bill around a card and swipe it through the terminal a few times. Train personnel to avoid unnecessary key-entered transactions. 

4) Enter the correct ZIP code when a card number must be hand-keyed.
Sometimes the magnetic strip on a card is worn, making the card reader unable to process, and you have to hand-key the transaction. This will result in a higher fee than when a card is swiped; however, there is something you can do to minimize this fee. What you can do: When prompted for the ZIP code during a hand-keyed transaction, ask the card holder for the ZIP code used for their billing statement. The ZIP code must match the one on record to ensure that you pay the minimum fee for this type of transaction. If this does not match, you may elect to process the card anyway. But, there’s a higher risk of fraud, and you will pay a higher fee.

5) Limit card-not-present transactions.
Card-not-present (CNP) transactions occur when cardholders provide their card number and other information over the phone, Internet, fax or mail. Since there is no face-to-face interaction or physical signature, these transactions are higher-risk and often result in higher fees. What you can do: Use the address verification service (AVS) correctly. You must enter address, ZIP code and an invoice number to receive a more favorable rate. If you do not have an invoice number, we recommend you enter the last four digits of the card number for reference.

Call Bank of America Merchant Services at 877-695-2472 to learn more and ask about the AOA member benefit.

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