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Top tips for reducing the cost of payments

With a chill in the air and Christmas on the horizon, now is the perfect time to focus on reviewing payment processes and costs. It will be well worth the effort when the busy festive season arrives. Rob Crutchington, CEO of Encoded guides us through the essentials of fast, frictionless and affordable payments.

A snapshot from the British Retail Consortium (BRC) showed total retail sales grew by 3.1% year on year in June this year against a decline of 0.2% in June 2024.

While great news for business, last summer’s global tech outage that froze card payments and recent high-profile data breaches are reminders of how vital a robust payment infrastructure is. It is never too soon to review just how secure your payments are and how much they are costing.

Here are my three top tips for reducing costs while improving customer experience

1. Renegotiate your merchant services account

Merchant services accounts are a bit like bank accounts. People open a bank account when they are students, or start earning, and tend not to change. This same “inertia” often applies to merchants who get a MID (merchant ID) when they start trading and stick with the same terms and conditions even when there are more favourable ones available.

Have a look around and reduce payment costs by taking advantage of new offers. For example, an Encoded Merchant Services Account is currently offering a guaranteed 10% saving on existing fees*. For 25 years Encoded has been providing payment services exclusively to top businesses and global brands. Now we are open to businesses of all sizes, offering Merchany Accounts with a price saving guarantee.

2. Check your payment gateway makes the most of least cost acquiring

Merchants may have accounts with multiple acquirers which offer varying rates, for different card schemes and types. As an independent Gateway Services Provider, Encoded is not linked to an acquiring bank and as such offers a cost-effective alternative for routing payment transactions. Encoded’s Payment Gateway can interact with numerous acquirers and gateways on a per-transaction basis. This allows merchants to customise their gateway to each transaction and a specific acquirer based on their own criteria – leading to cost savings.

As an example, a merchant can set a rule to automatically route transactions with high-risk customers to low-risk payment options. Or select a channel that offers the current lowest cost for transactions. Routing payments in real-time to the most cost-effective merchant service provider makes sound business sense and this dynamic least cost acquiring functionality can slash costs. Check out what is currently happening with your provider.

3. Reduce Compliance Costs by Descoping for PCI DSS

De-scoping is the process to reduce the number of requirements (tick-boxes) for Payment Card Industry Data Security Standard (PCI DSS) compliance. This can be achieved by passing the responsibility for handling card data to a third party. As the Merchant Account Agreement is between the merchant and the acquirer, the responsibility for PCI DSS compliance cannot be entirely removed, however the amount of time and work required demonstrating compliance can be dramatically reduced.

Encoded’s token vault securely holds card data to enable one-click, recurring and subscription payments. As the token vault is acquirer-agnostic, this means that merchants can benefit from intelligent routing and least cost acquiring functionality while reducing the cost of compliance.

Innovative technology solutions are essential to running a business cost-efficiently, but they require effective behind-the-scenes processes to maximise performance. For example, robust security policies and procedures are critical to avoiding other costs like heavy penalties for non-compliance with PCI DSS. Invest in training and education on PCI DSS or work with a Level 1 PCI DSS accredited supplier such as Encoded to create a watertight security management framework. For more ideas on how to reduce costs, enhance your payment processes and maximise business success, contact us to learn more.
*Saving dependant on a successful application, MCC and monthly transaction volumes.

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