Getting the Best Deal from your Payment Gateway

How to Negotiate Your Payment Gateway or Merchant Account Agreement

It may seem difficult to negotiate reasonable fees for credit card processing. If you’re a small merchant or just getting started you won’t always get a great deal. But we’re here to help and we’ve got a process that’s easy to follow. So let’s get started helping you learn more about online payment processing.

Here is what you will learn:

  • A checklist to decide if negotiating with your payment gateway provider is worth the effort
  • How to get ready to negotiate with your payment gateway provider
  • How to set your own expectations so you don’t get frustrated.
  • This is part 1 of a 5 part series on negotiating with your payment gateway.


Know your sales
Do you have a lot of sales or are you just starting out? What is your average order size? Is the average order $5 or $500? The bigger the order the better the fee for the merchant account provider. This is because the merchant account provider will charge a percent of the transaction.

Know where you want to sell
Do you want to sell in the US or in overseas countries? This help you determine the types of payment methods that you need to offer your customers. If you’re only selling in the US then credit card is normally sufficient. If you’re selling other places in the world then you will need more than a credit card payment.

Be realistic

If you’ve not made your first sale online then you won’t be in a position to demand a great deal. You may not be able to get any deals at all and need to go to PayPal. PayPal won’t deal with you. You’ll have to take their off the rack pricing. But it will get you started. Another place to consider is Stripe. Yet another place is Braintree. Both companies have a reputation for being easy to work with and easy to add to your website. The pricing will not be the best but they will get you started into ecommerce.

After going through these three things decide how much time you want to invest in negotiating with your payment processor. It can take several weeks or even months to get a great deal. You’ve got a business to run and so haggling with your payment processor might not be worth the trouble.


Payment Processing Rates: Getting a Deal

Negotiating a great deal for accepting credit cards can be difficult. We’re here to walk through some steps that we use for success. This is part 2 of 5 in a series. If you’ve not read part 1 please click here. Now on to part 2 in getting a good deal on your payment processing.

square card readerSelect 3 Payment Gateway Providers

Once you’ve done your homework in part 1 you need to select a payment gateway provider. If you’re serious about getting a good deal you need to pick at least 3 payment gateway providers. Why three?
Three providers will provide enough competition to help you get the best deal possible.

Select 3 Little Known Providers

We recommend you select providers that are not household names. Why? These providers will often be your best deal. The household names you care about are the brand names of the credit cards. The name of the payment gateway does not matter to your customers.

To find a lesser known payment processor simply do a search, ask other merchants or ask your bank. Many times the less well known company is reselling a famous company’s gateway. But you will get better pricing.

Receive Pass Through and Bundled Quotes

Here is where things can get tricky. There are several fees that you can pay in payment processing.

Authorization, Capture, Refund and Void Fees

There are several basic credit card transactions that we need to cover. This helps you understand the gibberish used in the payment processing industry. The goal here is to help you get a better deal as knowledge is power.


When you send the customer’s payment to your payment gateway you are sending an authorization. This is a request to check the credit card and see if the card can take the payment. The authorization request also reserves money on the customer’s credit card. Credit cards have limits on the dollar amount the customer can spend. So your authorization request sets aside money on the card for the purchase. There is typically a fee for this. The authorization is your most common transaction so you will want to get this fee to a level that makes sense for your business.


When you receive an OK response back from the payment gateway on your authorization request you are ready to ship the product to the customer. Right before you ship the product you will send a capture request to the payment gateway. This capture request charges the customer’s credit card.


Customers will ask you for refunds. You will investigate the refund and give the customer the money back on their credit card. This is a refund transaction and the payment gateway will charge you for this.


A Void is used to cancel an authorization on a credit card. Suppose you are out of stock of the product that your customer ordered. You have no product so you need to void the authorization request.You should ask the payment gateway to give you a quote on each one of these items.

Interchange Fees

Interchange is the name of the fee paid to the credit card network. It’s a standard fee that is publicly available. Most payment gateways will want to pay this for you on your behalf. By doing this the payment gateway has more control over the money they make from you. You need to ask for a “pass through” rate. This is where you pay the interchange fees directly to the credit card companies and your fees to the payment gateway are separate. This can get difficult as the payment gateway will tell you that you’re not big enough to make this worthwhile. That can sometimes be true. But try asking all three of your payment gateways.

Gateway Fees

Gateway fees are monthly fees for using the gateway. These are not important fees and you normally can request that they be removed. Gateways will often charge a monthly maintenance fee. This fee goes straight into the payment gateway’s pocket and there is little value. You can negotiate removing this fee by telling the payment gateway provider that you believe in paying for work. Therefore, you want to pay them when there is a transaction.

Implementation Fees

Implementation can have a cost for the payment gateway. Most payment gateways will have people and processes ready to help you. So this is a fee that you should remove. In some cases you won’t be able to if you have a low volume or complicated integration that needs testing. However, there should not be much of a fee here as the payment gateway provider should make money from a steady flow of transactions and not one time fees.

Chargeback Fees

Chargeback fees have three components. Reciepts, representment one and representment two.
Receipts are when you the merchant request prove that the customer authorized the transaction. The payment processor pulls an electronic receipt for you. Representments are when you collect compelling evidence that the customer has made a purchase from you. There are two representments. These are known as representment 1 and representment 2. (Thank goodness the naming here is not complicated.) The payment gateway provider will charge you for each item.

Receipt: You request and receive a transaction record from your payment gateway provider. You will typically have your own records. But its good to get a price on this in case you need it.

Representment 1: Representment 1 is when the evidence you collected that shows you made a sale to the customer is passed to the customer’s bank. Why the bank? The bank is who sold or issued the credit card to the customer. There is a fee here for the payment gateway to help you through this process.

Representment 2: Representment 2 happens when the bank tells your payment gateway that they agree with their customer. In Representment 2 you have more opportunity to present your case. There is a fee for this service.

Other Fees

There are other fees that we will cover in the next installment of this series. But let’s first do a quick recap of the steps to negotiate with a payment processor.

How to Negotiate with Your Internet Payment Gateway Provider.

Step 1:

Determine if you have the time and energy to negotiate.

Step 2:

Prepare for negotiation by estimating your transaction volume or number of sales you plan to make.

Step 3:

Find at least 2 payment processors. Ideally you will want little known payment gateways. Many times the lesser known providers are reselling payment gateways from large industrial providers. You often will get a better deal by finding less well known payment gateway providers.

Step 4:

Don’t tell your payment gateway provider your order, sales or transaction volume if you don’t have to.

Step 5:

Meet with your payment provider and ask them to break out the fees for authorizations, captures, refunds, voids, receipt requests, representment 1 and representment 2 for chargebacks. Ask for pass through pricing where you pay the interchange fees directly to the credit card companies.

Now comes some more work but it’s mainly talking with the payment gateways to get the deal you want. We’ll go through the steps.

All the quotes you have received are too high

The payment gateway expects you to negotiate so you want will want to ask for a price reduction on authorizations, captures, refunds and chargebacks. Don’t ask for a “best and final” price. Simply ask for a reduction. You can tell your gateway that you want to invest the money saved in getting more customers. Payment gateways generally like to hear this because more customers means more sales and more revenue for them. You need to call each payment gateway on the phone and tell this.

New Prices from the Merchant Account Providers

Your merchant account provider and payment gateway provider will give you a second price. If they don’t you need to put them to the side unless they are the lowest price. You should never respond to price proposals immediately. Give it a couple days. Ideally you should wait for the salesperson to call you.

Responding to the Payment Gateway’s Second Price

You need to reject the second price proposal as well. You can reject this by telling the gateway that your margins are thin and you need to save as much money as you can. At this point the payment gateway may not have room (either real or perceived) to reduce your pricing again. So ask for value adds that the payment gateway can provide. What are these value adds? Sometimes the payment gateway can help you with marketing or help you get sales leads. This is a value add that most businesses don’t consider. Other value adds may include consulting to help you sell more product or free tickets to tradeshows and networking events. A final value add is customer support and customer service. Will the payment gateway give you 24 hour customer support? That’s worthwhile and something that you need to consider.

Time to Decide

We believe in going back two times to reduce the price. There are some instances where dragging out negotiations can get you a better result. But you have a business to run so we don’t recommend it. So at this point pick the best deal for you and your business. This can be the lowest price, the best deal in terms of value adds or the payment gateway that you feel the most comfortable with.

Get all the price proposals in writing.

This is a great business practice for any business so be sure to do it. Ask for an email with the pricing for all services.
If you’re uncomfortable or you have questions ask the payment gateway salesperson. Remember. The job of the salesperson is to make sure you understand their products and services.

Last Minute Negotiations

Normally at this point the merchant account provider is pretty eager to close the deal with you. We don’t recommend changing pricing once you have agreed to the pricing. However, before you agree ask the payment gateway to reduce any prices that they feel they can. The gateway will select the things that are easiest for them to reduce. So give the payment provider a choice of what they want to reduce.

Accepting the Pricing

Once the payment gateway has responded in writing with the final pricing. You’re nearly done with the deal. Get a copy of the standard agreement from the payment processor and read it. Also locate a contracts attorney if you don’t have one already. Ask the attorney to read through the agreement from start to finish. Also talk with the attorney over the phone about your business, how payments work and the general nature of the agreement. If you need an attorney go to is a place to locate many different types of attorneys including contract attorneys. You will be able to see reviews of the attorneys and be able to pick the best one for you. Generally, you will want an attorney who does business contracts. The fee for the attorney will run between $300 to $1,000 depending on the time required and where you are located. But this is money well spent. Ask your attorney to recommend any changes to the contract that are reasonable. Attorneys with experience can help you decide what are reasonable requests and what are crazy. Once you have your attorney’s recommendations, share the recommendations with your payment gateway. Explain that you are generally OK with the pricing but you need the changes proposed by your attorney to be accepted.

Getting a New Contract

At this point the payment gateway will either honor your requested changes or there will be some back and forth over changes. You need to decide how much more time and energy you want to spend on this. Expect that there will two rounds of back in forth. In other words, your payment processor will respond with changes about two times. Once you get the second set of revisions from your payment processor have another review done by your attorney. Because you are a repeat customer and the attorney has already read the contract this should only be about an hour. Ask your attorney for a discount as you are repeat business. Normally your attorney will agree. Indicate to your attorney that you will be happy to write a positive review in

Signing the Contract

Once your attorney has give you the OK and walked through the specific details of the contract, you should ask your payment processor to sign the contract first. You always want the payment processor to sign before you. This way the payment processor does not withhold their signature in order to get additional conditions from you.

Storing the Contract

After your payment processor signs the contract and you sign be sure to store hard copies and electronic copies in a reliable location. Ideally, you will store electronic copies on a hard drive and in cloud storage such as Office 365, Dropbox, Box, Google Drive or any other provider. Don’t rely on a paper copy alone. Please.

Meet with Your Payment Gateway Provider and Determine Implementation Dates.

Your payment processor will want you to start implementing their gateway as soon as possible. This is the only way the provider gets paid so they’ll push you to implement quickly. This is a great time to ask for help. Your provider generally can offer help in technical support questions, testing and sometimes even doing the work for you.

  • Meet your payment processor and select a date to implement their payment gateway.
  • Ask your payment gateway provider for help. Generally, this will be testing, technical support and development.

Make friends with your payment processor

Contract negotiations can often be contentious and there can be plenty of arguing. You’re fighting over money so this can be a natural thing to happen at times. But after the agreement is signed make up with your payment processor quickly. Be friends. Both of you want the same thing: more orders for your business and more transactions for the payment processor. You will need your payment processor’s help from time to time. So become friends with your payment processor! It’s in your best interests and theirs.

  • Make friends with your payment processor
  • Ensure that contract negotiations are mentally and emotionally completed

Meet the operations and technical support people at your payment processor

The payment gateway will have operations, technical support and merchant service people. Generally you will receive emails and telephone numbers to contact them for help. However, we recommend that you at least call them on the phone and introduce yourself. The more the support people know you the more help you’ll get when you need it. Try to meet the entire team in person if you can. We recommend asking your salesperson to take you to the support area and meeting all the support teams. If you can give away sample products or gift certificates for lunches that is helpful. The operations and support people are critical to your success and so getting to know them and getting them to like you is important.

  • Meet the support teams and support people at the payment gateway
  • At least have a conference call with the operations, technical support and merchant services areas
  • Visit the support offices and meet the support teams in person if you can. The more teams know you and your business the better help you can get when you need it.

Get all the contact information

Make sure you get all of the contact information for operations, technical support, billing and etc. Payment gateways are staffed by operations, billing, merchant services, technical support and other groups. You will need to reach these groups from time to time so be sure to get their information.

  • Get the telephone numbers and email addresses of the support teams. Make this information readily available.
  • Dial the phone numbers and test the emails to make sure they are working. Just put the word “test” in the email.

Review all the merchant documents and ask questions

Payment gateways have loads of documents, webpages and other information for you to review. Spend a few hours going through all of the information. Try to understand as much as you can. If you have questions the payment gateway will answer them for you. It’s best to go through the documents now. If you wait until there is a problem you will less familiar with the gateway and this can make problem resolution difficult and time consuming.

Thank you for reading! We hope this all helpful to you and your business.

[schema type=”review” url=”” name=”How to Negotiate with a Payment Processor” description=”Getting a good deal from a payment processor can be tough. We have a process for negotiating. It’s a few simple steps. Check it out.” rev_name=”How to Negotiate with a Payment Processor” rev_body=”Negotiate with a Payment Gateway Provider” author=”Brandi” pubdate=”2015-08-29″ ]