By Matilda Noble June 11, 2025
For small businesses in Scranton, every dollar saved can have a big impact. With tight profit margins and rising operating expenses, even small improvements in cost efficiency can help a business thrive. One of the most overlooked areas where local businesses can cut costs is in credit card processing. These fees, often accepted as a necessary cost of doing business, can quietly eat into your earnings month after month.
Whether you’re running a café downtown, a retail store on Wyoming Avenue, or a mobile service business across Lackawanna County, you’re likely paying a mix of interchange, processor, and transaction fees just to accept card payments. The good news is there are practical strategies that Scranton entrepreneurs can use to reduce these charges without compromising on service or security.
Understanding the Basics of Credit Card Processing Fees
Before making changes, it’s important to understand what you’re actually paying. Credit card processing fees typically fall into three main categories. The first is the interchange fee, which is paid to the card-issuing bank. This is usually the largest portion of your total cost and is set by the card networks like Visa and Mastercard. It varies depending on the type of card used and the nature of the transaction.
The second component is the assessment fee, which is charged by the card networks themselves. These are fixed and non-negotiable, though relatively small on their own. The third is the processor’s markup. This is where you often have the most room to negotiate or switch to a more cost-effective provider.
For many Scranton business owners, these combined fees can range from 2 percent to 4 percent of each transaction. On the surface, it may not seem like much, but over time, it can significantly impact profitability. That’s why understanding the structure and flow of these charges is the first step toward reducing them.
Choose the Right Pricing Model for Your Business
Not all credit card processing pricing models are created equal. The pricing structure you select can greatly influence how much you pay over time. One common model is tiered pricing, which categorizes transactions into qualified, mid-qualified, and non-qualified rates. This model is often unclear and can lead to unpredictable costs.
Another option is flat-rate pricing, offered by companies like Square or PayPal. While convenient and easy to understand, this model might not be the most economical for businesses with higher monthly volumes or larger average transactions.
Interchange-plus pricing is generally the most transparent and cost-effective model for many Scranton businesses. Under this setup, you pay the actual interchange fee plus a fixed markup from the processor. This allows you to see exactly what you’re being charged and ensures that rate increases are tied to actual costs rather than arbitrary rate hikes.
If you’re unsure which model suits your business best, consider consulting with a payment advisor or comparing detailed quotes from different providers. The right pricing structure can shave thousands off your annual processing expenses.
Work With Local Providers Who Understand Scranton’s Market
While national processors offer scale and brand recognition, local businesses can often benefit more from working with providers who understand their regional market. Scranton has a close-knit small business community, and many local merchant service providers are more flexible, responsive, and willing to tailor solutions.
Local providers often offer personalized support and can help you review your transaction history to recommend cost-saving strategies. They may also have a better understanding of Pennsylvania state tax rules, regional payment trends, and the specific needs of businesses operating in places like the South Side, Green Ridge, or the Hill Section.
Moreover, local processors can respond more quickly when issues arise. Whether you need hardware replacements, technical support, or help with chargebacks, being able to speak directly with someone nearby instead of calling a national hotline makes a real difference in daily operations.
Minimize Non-Qualified Transactions
Non-qualified transactions are the most expensive types of card payments and often occur when a card is keyed in manually, when the billing information is incomplete, or when a rewards or business card is used. Scranton businesses can reduce these charges by ensuring that transactions are processed with best practices in place.
Encourage customers to insert or tap their cards instead of manually entering numbers. Upgrade to EMV-compliant terminals that accept chip cards and contactless payments. These tools not only reduce fraud risk but also qualify you for lower interchange fees.
Staff training also plays a role. Educating employees to verify billing details and avoid manually entering card data when possible can prevent costly processing errors. Using address verification services (AVS) during keyed-in transactions can also improve qualification levels and lower fees.
For online businesses or restaurants offering delivery, investing in secure, PCI-compliant checkout systems will reduce the chances of downgraded transactions. These small adjustments can lead to meaningful savings over time.
Implement Surcharging or Cash Discount Programs
One increasingly popular strategy to offset processing fees is to implement a surcharge or cash discount program. These models pass some or all of the credit card processing cost back to the customer, which can significantly improve your bottom line without raising base prices.
Surcharging adds a small percentage fee to the customer’s bill when they choose to pay with a credit card. However, it must be done in compliance with state laws and card brand guidelines. Pennsylvania currently allows surcharges, provided businesses follow specific rules and disclose them properly at the point of sale.
Alternatively, cash discounting offers customers a lower price if they pay with cash or check. The posted price includes the credit card fee, and the discount is applied only when non-card payment is used. This model is legal in all 50 states and tends to be easier for small businesses to implement.
Many Scranton retailers, salons, and service providers have successfully adopted one of these models. It’s important, however, to work with a provider that sets up the program correctly and helps you avoid compliance pitfalls.
Audit Your Monthly Statements Regularly
Even after negotiating lower fees or switching providers, ongoing savings depend on vigilance. Credit card processors occasionally add hidden fees, adjust rates, or apply charges that were not part of your initial agreement. Regularly auditing your monthly statements can help catch these changes early.
Look for unnecessary add-ons like statement fees, minimum monthly charges, PCI compliance fees, or batch processing costs. Some of these may be negotiable or waived entirely, especially if your business processes a consistent volume each month.
Scranton business owners should also track their effective rate, which is the total processing fee divided by total card sales for the month. This percentage gives you a clear picture of what you’re truly paying and helps identify when it’s time to renegotiate or switch.
If you find the process overwhelming, consider hiring a payment consultant to conduct a review. The one-time cost of an expert analysis can pay off quickly in long-term savings.
Embrace Modern Payment Technology
Older payment terminals and legacy systems can contribute to higher fees and slower processing times. Scranton businesses can benefit from upgrading to modern hardware and integrated POS systems that are designed with cost efficiency in mind.
Many of today’s cloud-based POS platforms include built-in reporting tools, inventory tracking, and analytics dashboards. More importantly, they often come with lower processing fees due to better integration with processors and better data collection that qualifies for lower interchange rates.
Using updated technology also enhances the customer experience. Whether you’re running a café in downtown Scranton or a boutique in the Electric City area, a smooth and modern checkout process encourages repeat business and helps reduce abandoned transactions.
Some modern terminals also support tokenization and advanced security measures, further reducing fraud-related fees and improving trust with your clientele.
Encourage Debit Card Payments
Credit cards carry higher interchange fees than debit cards. Encouraging customers to use debit instead can help you lower your average processing rate. In most cases, debit transactions—especially those entered with a PIN—are processed at lower cost than credit transactions.
You can subtly influence this by adjusting how your payment terminal prompts customers. For example, making debit the default selection or offering small incentives for using PIN-based cards can shift behavior over time.
While you can’t control which card a customer pulls out, small nudges at the point of sale can influence payment methods and help you maintain lower average fees across your daily transactions.
Build Strong Relationships with Your Payment Processor
For many Scranton small businesses, the relationship with their payment processor is treated as transactional. But turning that into a strategic partnership can unlock deeper savings and better service. Processors are more likely to offer favorable rates, waive certain fees, or provide advanced features when they view your business as a long-term, valuable client.
Start by maintaining open communication. If your transaction volume is growing or if you’re expanding locations, let your provider know. These changes can be used to negotiate better terms or access features that were previously out of reach. A processor that understands your growth plans is better equipped to offer solutions that align with your trajectory.
Also, take advantage of annual or semi-annual account reviews. Many providers offer this service but few merchants utilize it. During these reviews, your processor can help identify shifts in transaction patterns, suggest more appropriate pricing tiers, or recommend new tools that save both time and money.
A strong provider will also alert you to regulatory changes or updates in payment technology that could affect your business. This ongoing guidance helps you stay compliant and competitive.
Know When to Switch Providers
Even with the best intentions, not all processors are transparent or efficient. If your current provider isn’t delivering on promised rates, has poor customer service, or makes it difficult to understand your statements, it may be time to make a change.
Scranton businesses are not limited to just national names. There are several regional and specialized providers who cater specifically to small and mid-sized merchants. These providers often have more flexibility in pricing and provide more personalized support.
Before switching, collect your most recent processing statements and compare them with quotes from other providers. Focus on the effective rate, transparency of fees, contract length, and ease of integration with your current systems. The goal isn’t just to find the lowest fee but the best overall value for your unique business needs.
Many businesses are hesitant to switch due to fears of downtime or technical issues, but with proper planning, the transition can be seamless. In most cases, the savings realized in just a few months will outweigh any short-term inconvenience.
Educate Staff on Payment Best Practices
Your employees play a critical role in how payments are processed. Even with the right technology and pricing model, poor handling of transactions can result in higher fees or more chargebacks. Training your team on payment best practices ensures that the systems you’ve put in place work effectively.
Train staff to always insert or tap cards rather than swiping or keying in information, which often results in downgraded transactions. Make sure they understand how to confirm billing information, identify suspicious activity, and explain processing fees or surcharges to customers in a clear and professional manner.
For Scranton businesses that operate with small teams, this kind of knowledge transfer is especially important. One poorly processed transaction may cost more than an entire day’s worth of low-fee sales.
Consistent training and reinforcement of payment best practices create a more secure, efficient checkout process and reduce unnecessary costs.
Use Reporting Tools to Track Trends
Modern payment processors and POS systems come equipped with powerful reporting tools. These dashboards provide insights into sales trends, transaction types, and processing costs. Scranton business owners who regularly review these reports can spot patterns and make informed decisions to optimize payment strategies.
If you notice a high percentage of keyed-in transactions, consider whether it’s due to outdated hardware or customer behavior. If chargebacks are rising, investigate whether it’s linked to a specific product or promotion. These data points help you proactively adjust before minor issues become costly problems.
Some processors offer custom reporting and chargeback dashboards. If yours does, make sure you’re using them regularly. If not, consider asking about upgrade options or third-party software that integrates with your current setup.
The more you understand your own transaction data, the more leverage you have when negotiating fees or selecting new services.
Conclusion
Credit card processing fees are an unavoidable part of doing business, but they don’t have to be a burden. For Scranton small businesses, there are numerous ways to reduce these costs with careful planning, provider comparison, and consistent transaction management.
Start by understanding the true structure of your current fees. Then explore better pricing models, work with providers who know the Scranton market, and audit your statements to eliminate unnecessary charges. Embrace modern payment technology, train your staff, and look into options like surcharging or cash discounts to shift some of the processing burden.