How to Reduce Your Credit Card Processing Costs

1 Switch to Interchange-Plus Pricing

Potential Savings: 0.3% - 1.0% of volume

If you are on a flat-rate or tiered pricing model, switching to interchange-plus (IC+) pricing is often the single highest-impact action you can take. Under IC+, you pay the actual interchange rate for each transaction type plus a fixed, transparent processor markup.

The savings depend on your card mix. If a significant portion of your transactions are debit cards or basic credit cards — which carry much lower interchange than premium rewards cards — you are almost certainly overpaying under flat-rate pricing. See our detailed comparison in flat-rate vs interchange-plus pricing.

2 Negotiate Your Processor Markup

Potential Savings: 0.1% - 0.5% of volume

Interchange rates are non-negotiable (set by card networks), but your processor's markup absolutely is. The markup consists of the percentage markup and the per-transaction fee. Both can be negotiated, especially if you have:

• Processing volume over $25,000/month
• A low chargeback rate (under 0.5%)
• A low-risk business type
• Multiple years of processing history

When negotiating, ask specifically for a reduction in the per-transaction fee. For a business processing 1,000 transactions per month, reducing the per-transaction fee by $0.05 saves $600 annually. Contact TIB Finance's merchant services team to discuss your current rates.

3 Maximize Card-Present Transactions

Potential Savings: 0.3% - 0.5% on eligible transactions

Card-present (chip + PIN or contactless) transactions qualify for lower interchange rates than card-not-present transactions because physical authentication reduces fraud risk. Practical actions:

• Ensure your terminals support and prompt for chip + PIN entry rather than swipe
• Enable tap-to-pay (NFC) for faster, low-value transactions
• If you take phone orders, consider whether a virtual terminal or payment link is viable to shift those transactions to cardholder-entered (rather than merchant key-entered) rates
• Never key-enter transactions when the card is physically present — always use the chip reader

4 Use Address Verification Service (AVS)

Potential Savings: 0.1% - 0.3% on CNP transactions

For card-not-present (CNP) transactions — e-commerce, phone orders — submitting the cardholder's billing postal code and CVV/CVC security code enables AVS verification. Transactions that pass AVS checks qualify for preferred CNP interchange rates and have lower fraud risk.

Ensure your payment gateway or virtual terminal is configured to collect and submit AVS data with every authorization request. This is a low-effort configuration change that can qualify hundreds of transactions for lower interchange categories monthly.

5 Batch Settle Every Day

Potential Savings: Avoids rate downgrades

Card networks require that transactions be settled within 72 hours of authorization. Transactions settled after this window are "downgraded" to a higher interchange category — sometimes 0.5%–1.0% higher than the standard rate.

Set your terminal to automatically batch close at end of business day, or confirm your gateway is set to auto-settle daily. Do not wait to accumulate a week's worth of transactions before batching. This is especially important during holiday periods when bank closures can delay your processing workflow.

6 Submit Level 2 and Level 3 Data for B2B Transactions

Potential Savings: 0.5% - 1.5% on corporate card transactions

If you sell to other businesses, many of your customers pay with corporate purchase cards. These cards carry high standard interchange rates but qualify for significantly reduced rates when Level 2 or Level 3 data is submitted with the transaction.

• Level 2 data: Customer purchase order number, tax amount, merchant postal code, and invoice number
• Level 3 data: Line-item detail including product codes, quantities, unit prices, and shipping information

Ask your processor or payment gateway whether they support Level 2/3 data submission for B2B transactions. For businesses with significant corporate card volume, this strategy alone can save thousands per year.

7 Offer ACH/EFT for Recurring and Large Payments

Potential Savings: 1.0% - 2.0% per transaction

Credit cards are expensive for large, recurring B2B payments. EFT (electronic funds transfer) in Canada costs a fraction of a percent per transaction — often under $1 flat fee — compared to 1.5%–2.5% for credit cards. For a $10,000 monthly payment, that is the difference between $2 and $200.

Consider offering ACH/EFT payment options for:

• Monthly subscription billings
• Large B2B invoices (over $1,000)
• Payroll and vendor payments
• Pre-authorized debit plans for regular customers

TIB Finance supports ACH/EFT payments with straightforward integration. Learn more about how they work in our guide to ACH/EFT payments in Canada.

8 Reduce Your Chargeback Rate

Potential Savings: $15 - $100 per dispute avoided

Each chargeback costs $15–$100 in fees — and you also lose the sale amount even if the dispute is resolved in your favour. High chargeback rates can trigger additional monitoring fees or even account termination. Preventive measures include:

• Use clear, recognizable billing descriptors that match your business name
• Send email receipts with clear cancellation/return policy links
• Respond quickly to customer service inquiries (many chargebacks start as unresolved complaints)
• Use 3D Secure (Verified by Visa, Mastercard Identity Check) for online transactions
• Implement fraud scoring and decline high-risk orders proactively

9 Eliminate Avoidable Monthly Fees

Potential Savings: $20 - $150/month

Review every line item on your monthly statement:

• PCI non-compliance fee: Complete your annual SAQ immediately if you are paying this — it is entirely avoidable and contributes nothing.
• Terminal rental fees: If you are renting a terminal and have been for over a year, purchasing outright is almost always cheaper. A terminal that costs $300–$500 to buy is often rented at $30–$60/month.
• Minimum monthly fees: If you are not meeting processing minimums, discuss your pricing plan with your processor.
• Duplicate gateway fees: Ensure you are not paying for multiple gateways or services you no longer use.

10 Conduct Annual Rate Reviews

Potential Savings: Varies

Card network interchange rates change twice per year. Processor pricing can become uncompetitive over time. Schedule an annual review of your processing costs that includes:

• Comparing your current effective rate against market rates for your industry and volume
• Requesting a rate review from your current processor
• Getting competing quotes if your processor is unwilling to negotiate
• Reviewing whether any new payment types (INTERAC e-Transfer, EFT) could reduce costs for specific payment categories

TIB Finance offers transparent IC+ pricing and welcomes rate review conversations with existing clients. Contact our team to schedule a review.