Guest Article: Tips For Lowering Your Payment Processing Costs


Nearly every single operating cost within your fuel business has increased by double digit percentages in the past 3 years. Credit card processing fees are no exception. Some increased operating costs you have no control over, and a lot of businesses assume credit card processing falls into that definition. Surprisingly there are some steps you can take to manage these costs. Here is an article from an PPA Associate Member/Partner (Jon Gilbert of Qualpay) on how to lower the Overall Effective Rate within your business. If you haven’t reevaluated your credit card processing fees recently then maybe 2023 might be the appropriate time to do so.


Lowering your Overall Effective Rate – The total amount you pay for Payment Processing, requires understanding each component of that cost along with how and where they can be lowered or eliminated.

Here are the most effective ways Energy Marketers can lower their credit card acceptance fees

1. Gateway Fees

A payment gateway is like a digital bridge that securely connects your company’s online or point-of-sale system to payment networks like credit card companies. It validates transactions by checking if customers have enough funds and authorizes the transfer of money for payments.

Traditionally, a gateway is a third party company that has their own associated costs. To remove a layer of cost you can utilize an integrated payment processor which combines a payment gateway and merchant account into one integrated solution. A single all-in-one solution eliminates the need for a third party gateway like Authorize.net or NMI which means those monthly gateway statements (and fees) go away.

Working with a technology focused payment processor can also provide several benefits such as data ownership, migration assistance, a single point of contact for customer service and more robust reconciliation reporting.

2. Interchange Fees

Interchange Fees constitute more than 70% of an Energy Marketer’s credit card statement. These fees, paid to card brands, depend on industry-specific rate programs and transaction data. Target interchange is the intersection of properly setting up your business with the correct industry classification combined with the proper data transmission sent to the card brands.

Energy Marketers can qualify for utility rates at $.75 per transaction for Discover and Mastercard. Recently, American Express rolled out a program that offers a $.75 flat fee for transactions under $1,000 and 1.5% per transaction for transactions greater than $1,000.

While Visa does not consider Delivered Fuels a Utility, they do offer a “Services” program for marketers which reduces interchange. Keep in mind to qualify for Utility rates for Discover, Mastercard, AMEX and also qualify for the Visa Services rates, your provider needs to be able to support dual MCC codes. Not all payment companies can support passing two rate programs through their platforms.

For a merchant to achieve Target Interchange, the card brands require that everything be in perfect order. This means that your card processing system is configured correctly and has the required capabilities.

It also means following all card brand rules and providing the necessary data required to ensure qualification at the lowest possible processing rate. Data can include a simple Card Verification Number (CVN) or something more complex like a tax rate or an invoice ID. This might seem easy, but with over 500 potential interchange price outcomes possible—all requiring different pieces of data—achieving the Target Interchange Rate can be daunting.

3. Updated technology is essential to qualify for the Target Interchange

One thing that can make qualifying for the Target Interchange challenging is the age of a merchant’s card processing technology. Older platforms may be unable to pass on the data necessary to achieve the least expensive interchange rate available.

When a transaction fails to provide all of the data that is required to qualify for a lower interchange rate, it gets downgraded. That means that the transaction incurs additional costs. If your business accepts commercial cards, purchasing cards or government cards, the interchange fees are not covered by the Utility or Services programs.  To receive the lowest rates possible, your payment partner needs to be able to pass Level 2 and Level 3 Data.  Not passing this data results in downgrades.

Downgrades are obviously expensive—and they are getting even more so. For example, in the wake of the new interchange rates being implemented by the card brands, an Energy Marketer, in some cases, can expect an additional 0.75% in the Interchange expense added to a Visa business card transaction that does not meet the requirements needed to achieve lower rates.

4. Pre-authorization payments are ripe for card transaction downgrades

One type of credit card payment that Energy Marketers need to be concerned with as far as avoiding downgrades is pre-authorization payments. Such payments are quite common in the fuel industry, driven by the need to verify the payment mechanism before delivering fuel.

The problem with this payment type is that while they hold funds for payment at the time of the order, they don’t charge the card until the order is fulfilled. If the so-called “auth and capture” doesn’t occur within a specified period of time (Three days for MasterCard and seven days for Visa), the transaction downgrades. For MasterCard, downgrades can increase interchange rates to 3% versus a flat $0.75 rate. For Visa, a rate increase of 1% is just the starting point. It can be even more.


Curious if your business is doing all it can to reduce your fees?  PPA members are eligible for a comprehensive payments audit from Qualpay at no cost or obligation. Contact jon@qualpay.com for more information.