How an Ecommerce Retailer Cut Credit Card Processing Costs by $200k

A $200k reduction in ecommerce payments fees for a major clothing retailer.

Ecommerce storefronts , for all the convenience they provide, present a number of challenges when it comes to payment processing fees. 

Whether a business uses something relatively turn-key like Shopify, or a custom storefront, a payment gateway must be integrated to facilitate the checkout process. To make that experience as smooth as possible for the customer often requires more sophisticated technologies and the natural consequence is: higher processing fees. 

The challenge:

Because gateways like Shopify Payments, PayPal, or Stripe emphasize this ease-of-use, there is much less emphasis placed on fee or rate transparency, or optimized transaction data. Businesses pay a premium for all of those bells and whistles. And many businesses won’t have the expertise or the access to implement the right processes to result in lower processing fees. 

One Verisave client, a clothing Etailer that has been in business since 2013, had invested significant time and money into their customer experience. Their storefront is easy to navigate, their products are attractively presented, and their checkout process is seamless. But like any mature business in this highly competitive space, they recognized a need for operational cost reduction within their payments stack. And so they set out to solve that problem. 

This client processes a significant volume of credit card transactions, and it was clear to their finance team that the fees they pay for each transaction were too high, especially through PayPal. 

To make matters worse, their statements were not transparent about how their fees were being calculated. This is not unusual in the ecommerce industry. 

How are Shopify and PayPal fees being calculated? Where does an ecommerce retailer start, when trying to address an overblown processing fee expense?

The solution:

Recognizing the need for outside expertise, the finance team enlisted Verisave to analyze their merchant account — a service Verisave offers at no cost. 

Our team combed through statement and account data, comparing the calculations against others we’ve analyzed from similar processors and industries, and we found a significant opportunity to reduce their fees. 

The client then hired Verisave to implement several key account optimizations, and our team went to work. 

Because of Verisave’s unique relationship with PayPal, we were able to work with our connections to reduce their processing fees, and consolidated their non-PayPal fees, reducing their yearly fee expense by over $200k. 

Verisave also incorporated some future-proofing into the account. Less than a year after the project was complete, PayPal incorporated an across-the-board rate increase … but because of the special account setup by Verisave, our client was immune to this increase.

These days there are a lot of dials that can be turned to help with a storefront processing stack. Often we help clients reduce fees without changing their current setup: staying with Shopify, for example, and maintaining existing integrations. 

Quick Facts: Ecommerce Processing Fee Cost Reduction

  • Beginning Overall Effective Rate: 2.95% 
    (Overall Effective Rate is the percentage of a transaction total that gets charged as a processing fee) 
  • Target Overall Effective Rate: 2.0%
  • PayPal 2022 Increase Nullified 
  • Account Areas Affected: 3 
  • Total Monthly Cost Reduction: $16,500
  • $200k saved per year 

If your business is looking to better manage your merchant account or reduce fees, we’re here to help. We fix and monitor your existing merchant account, and we bring that money back to you. No need to change processors or add a project to your team’s already hectic workload. Schedule a consultation today.

Verisave is a third-party cost-reduction firm specializing in merchant accounts and credit card processing fees.

Verisave is not a payment processor, and is not affiliated with any processors, card brands, or banks.

Verisave has more than 20 years of experience optimizing and monitoring the credit card processing industry.

Contact Verisave