By Bella Zhang March 19, 2025
Running a bakery is a rewarding business, but controlling costs is essential for profitability. Credit card processing fees are one of the most significant expenses for bakery owners. If you’re not careful, these fees may eat up your profits. Negotiating better interchange plus rates can help your bakery reduce merchant fees and save thousands of dollars each year. Here’s how to successfully negotiate payment processing fees and maximize savings for your bakery business.
Understanding Interchange Plus Pricing
Before negotiating better rates, you need to understand what interchange plus pricing is. Unlike flat-rate pricing, which charges a fixed percentage for every transaction, interchange plus pricing consists of two components: the interchange fee (set by credit card networks like Visa and Mastercard) and the processor’s markup. The interchange fee is non-negotiable, but the processor’s markup is where you have room to negotiate.
Many payment processors charge hidden fees or inflated markups, so review your statements and compare pricing structures. By lowering credit card fees, you can boost your bakery’s profits without sacrificing customer convenience.
Assess Your Current Payment Processing Fees
The first step in negotiating better interchange plus rates is to review your current processing fees. Examine your merchant statements and identify the following:
The interchange fee percentage for different card types (debit, credit, rewards cards)
The processor’s markup and any additional fees
Monthly charges and equipment rental fees
If you notice excessive charges, it’s time to discuss better rates with your current provider or look for alternatives that offer lower merchant fees.
Compare Offers from Different Payment Processors
Once you’ve assessed your current fees, contact several payment processors to compare their interchange plus pricing. Some processors provide competitive rates, whereas others may impose unnecessary fees. When requesting quotes, request complete transparency regarding their pricing structure. Be clear about your monthly transaction volume and average ticket size, as this will help you get better deals.
It’s also essential to check for long-term contracts and early termination fees. Many processors lock businesses into multi-year agreements with hefty penalties for switching providers. Avoid these traps by negotiating flexible terms.
Leverage Your Transaction Volume to Negotiate Lower Rates
If your bakery handles a large number of credit card transactions, use that as leverage when negotiating with your payment processor. Businesses that generate significant revenue through card payments have more bargaining power. Highlight your monthly sales figures and request a lower markup percentage. Processors are frequently willing to adjust their rates in order to retain high-volume merchants.
Even if you operate a smaller bakery, you can still negotiate by demonstrating consistent business growth. Let providers know that as your bakery scales, they’ll benefit from increased transaction volumes.
Negotiate Away Unnecessary Fees
Many payment processors charge additional fees that aren’t always necessary. Some common ones include:
Statement fees
Batch fees
Monthly minimum fees
Ask your processor if they can waive or reduce these charges. Some fees, like PCI compliance, are mandatory, but others are negotiable. By eliminating these costs, you can reduce credit card costs significantly.
Consider a Membership-Based Pricing Model
Another way to reduce merchant fees is to look at membership-based pricing models. Some providers charge a flat monthly fee rather than a percentage of each transaction. This structure can help bakeries with high transaction volumes because it eliminates markups on individual sales. Compare this model to traditional interchange plus pricing to see which provides the best savings for your bakery business.
Ask for a Lower Markup on Card Transactions
While the interchange fee itself is non-negotiable, the processor’s markup is flexible. If your current provider is charging a high markup, request a lower percentage. For example, if they are adding 0.50% to each transaction, ask if they can lower it to 0.25%. Even small reductions in markups can lead to significant savings over time.
Prepare to present competitive quotes from other processors to support your negotiations. If your provider discovers that you have better offers elsewhere, they may be more willing to lower their fees in order to keep your business.
Review and Optimize Your Payment Processing Setup
Sometimes, the way transactions are processed affects the fees you pay. Consider these optimizations:
Encourage customers to use debit cards instead of credit cards, as they usually have lower interchange fees.
Use a point-of-sale (POS) system that qualifies for lower rates.
Ensure transactions are processed correctly to avoid higher interchange fees due to manual entry errors.
A well-optimized payment system helps in reducing credit card costs without sacrificing efficiency.
Consider Switching to a Better Payment Processor
If your current provider is unwilling to negotiate, you should consider switching to one that offers better interchange plus rates. Some processors specialize in serving small businesses and bakeries, providing fair and transparent pricing. When switching providers, make sure that they offer:
Competitive interchange plus pricing
No hidden fees
Reliable customer support
Seamless integration with your existing POS system
Transitioning to a better processor can lead to long-term savings for your bakery business.
Negotiate Regularly and Stay Informed
The payment processing industry is constantly changing, and rates may fluctuate. Make a habit of reviewing your merchant statements and negotiating payment processing fees on a regular basis. Staying informed about industry trends and new providers can help you maintain lower merchant fees over time.
Even if you secure a good deal now, don’t assume it will always be the best option. Revisit your rates every six months to ensure you’re still getting the most competitive pricing.
Educate Yourself on Payment Processing Regulations
Understanding payment processing regulations can help you make more informed decisions. Some processors take advantage of business owners who are unaware of industry standards. Educate yourself on important factors such as:
Interchange fee regulations
Surcharging rules and limitations
Having this knowledge ensures that you don’t fall victim to unfair pricing schemes or hidden charges.
Final Thoughts
Negotiating better interchange plus rates for your bakery calls for research, strategy, and patience. By analyzing your current fees, comparing multiple providers, leveraging transaction volume, and negotiating unnecessary charges, you can significantly reduce merchant fees and increase bakery business savings. If your current processor isn’t offering competitive rates, don’t hesitate to upgrade. With the right approach, you can lower credit card costs while keeping more of your hard-earned profits.