How to Save $10,000 Per Year On Credit Card Fees [Step-by-Step Guide]

By May 4, 2017 No Comments
Last September, it was brought to our attention that we were paying nearly $20,000 per year in credit card fees at CrossFit Palm Beach.  Like so many of the other expenses that go into running a successful box, we initially just chalked this up as another cost of doing business.  We soon learned that this isn’t the case, and in fact, we could drastically reduce these fees on a monthly and yearly basis.
This post will detail the steps we took to reduce our fees, and how we are now on pace to save close to $10,000 in 2017 on credit card fees alone.
If you’re like us and were oblivious to how the credit card processing fees actually worked, here’s a quick breakdown.  
For every credit card transaction that we processed, we were typically paying a small flat transaction fee of about 25 cents and then an additional fee of 2-4% of the total cost of the transaction.  The fees vary based on the brand of credit card and whether it is a rewards card or not, with American Express topping the list for highest fees.  So on a monthly membership payment of $175 run on an American Express card, we were paying over $7 just in processing (175 x .04 + .25 = $7.25). 
As we started to do more research, we quickly learned that utilizing ACH (which refers to payments that come directly from an individual’s bank account rather than a credit card) had significantly lower fees.  Through our current payment processor (PaySimple), ACH transactions only had a single flat fee of 55 cents per transaction and no percentage off the total amount.  This meant that on a membership payment of $175 that used to cost us $7.25 to process, we would instead pay a total of 55 cents in processing.  A savings of $6 on a single transaction!   Imagine how that will add up over the hundreds of monthly transactions.  (Side note: the savings for ACH is specifically on higher amounts like membership payments where the % fee of the credit cards really adds up.  If we were to run an ACH payment for a $3 FitAid, we would actually pay more to do it via ACH than to do it on a credit card.)
Armed with this knowledge, we laid out 3 major objectives that would allow us save thousands for years to come.
  1. Get all of our current members to switch to ACH.  Or at least all of those that would be willing to switch.
  2. Renegotiate our current credit card rates with PaySimple so any members who still needed to run their payments through credit card would still cost less per transaction.
  3. Batch retail and monthly payments as much as possible to minimize total transactions and therefore limit transaction costs.

For the first objective, we felt it was best to be honest with our members and to be sincere about asking for their help, knowing that it would ultimately benefit them as well in the long run.  Ultimately, your members want to see the business succeed so why not be clear about how this is going to help the business as a whole.  Also, I would highly recommend putting some sense of urgency to what you are asking.  We used the Black Friday sale as a way of encouraging the members to help us fund our next equipment purchase, and it got a lot of them excited about bringing in their checks.  You could even take it a step further and make a competition out of it.

Just like with any announcement, I would suggest using several forms of communication so everyone sees and hears the message multiple times.  We sent out an email (which you can find below) separately from our normal bi-weekly newsletter, and we also mentioned it briefly in the next 2 newsletters.  We posted a similar message to our private CFPB members Facebook group, and had our coaches include the ACH announcement in most of the classes for about a week.  Below is a copy of the email that we sent out to our members.  Feel free to steal this and modify it to fit your situation.

“Happy Wednesday CFPB fam, 
We have a HUGE favor to ask from each one of you.  The good news is, it won’t take much time or effort on your part, but it will help us out in a REALLY BIG way, and allow us to return the favor.  
Over the last year alone, we have paid over $18,000 in credit card fees for processing monthly membership payments and retail charges.  Recently, we found out that we could save about 75% of that, if we are able to process everyone’s payments directly from the bank account, rather than having to use credit cards. 
In addition to the huge cost savings, this will dramatically cut down the amount of administrative hours that we spend replacing expired or stolen credit cards, especially as identity theft becomes more and more prominent. 
We want to continue to spend our time, money, and energy to improve your experience at CFPB, and transferring everyone over to direct debit, is one of the easiest ways we can do that.  With the holiday season coming, this is the time of year a lot of our equipment suppliers offer special deals that we can take advantage of.  Almost all of our D-Balls came from a Black Friday sale last year (I know, yay, more torture devices). We would love to be able to get everyone switched from credit card to checking accounts by November 1st, allowing us to re-invest the added savings into new barbells, plates, kettlebells, D-balls, bikes, and rowers.   
What do we need you to do?
Just do 1 of the 3 options below.
1.      Bring in a check and write “void” across it.   You can leave it with a coach or at the front desk. 
2.      Call us with your routing and account number. I’d say email too, but I don’t really trust email with your personal info. Voicemail should be safe enough if you want to leave it on a message. 
3.      Sign in to your Zen Planner member page and change your payment info.  This is probably the easiest if you have used the Zen Planner app for workout tracking and payments before.   The website is crossfitpalmbeach.sites.zenplanner.com and you can login with your username and password.  
Thank you so much for taking the time to do this!”
Through the emails, Facebook post, and class announcements, we were able to get close to half of our members to make the switch within a few weeks.  We also had one of our coaches reach out to members on an individual basis with phone calls and emails.  A small percentage of people requested to keep their credit cards on file, but most people gladly provided us with the checking account information.  We still have a coach that reaches out directly to members on a regular basis and this has allowed us to continue to reduce these fees.
For the members who wanted to keep using credit cards, we could save on their fees by re-negotiating with our credit card processors to reduce the fees.  When you initially sign up with most credit card processors, you are just getting their standard base rates that everyone has access to.  As your sales volume grows, and you prove to be a loyal customer, you can use this as leverage to reduce your rates.  We even took it a step further and talked to one of the biggest competitors in the payment processing industry (BluePay), and used their offer to negotiate our rates down even further with our current processor, PaySimple.
For our third and final objective, we started batching our retail payments, and charging those 2-3 times per month, rather than on a daily or weekly basis.  If we were to run each retail purchase as a separate payment it could add up to thousands of transactions, rather than a couple hundred transactions when batched.  This is important to consider as you switch to ACH, since you are actually paying more (55 cents vs 25 cents) for the flat-rate transaction fee.
As of this posting, we are already saving about $750 per month in processing fees, with a good amount of room left for improvement.  If you haven’t taken these steps to reduce your fees, it’s a no-brainer in my opinion.  There’s very little downside that I can think of, and the upside could be huge.

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