For auto dealerships, credit card processing fees can significantly impact profitability, especially given the high-ticket, low-margin nature of the industry. With transaction fees typically ranging from 1.5 to 3.5 percent, dealerships can lose thousands of dollars every month.
Auditing your dealership’s credit card processing fees is critical to ensuring you’re not overpaying and that your payment processing setup is aligned with your business goals.
Here’s a step-by-step guide to help get started:
Start by collecting all relevant documents, including:
Having a complete set of documentation enables you to track patterns, identify irregularities, and understand your actual processing costs.
Credit card processing fees have three main components—familiarizing yourself with them helps you understand where your money goes:
When reviewing your statements, focus on these key areas:
Our blog The Hidden Costs of Traditional Credit Card Processors: What Auto Dealers Need to Know delves further into the details of hidden processing fees.
Understanding your current pricing model and whether it aligns with your dealership’s specific needs is crucial. Different pricing structures can significantly impact your bottom line depending on your transaction volumes, average ticket sizes, and business model. Here are three of the most common:
For a more in-depth discussion of pricing models, check out The Hidden Costs of Traditional Credit Card Processors: What Auto Dealers Need to Know.
After analyzing your processing statements and understanding your pricing model, the next step is identifying and implementing strategies to reduce costs. Here are a few to start with:
Compare your effective rate against industry averages. Higher rates may indicate opportunities for optimization or the need to switch processors.
That said, rates can vary based on your dealership’s size, transaction volume, and department mix (sales, service, parts). So, when benchmarking, be sure to factor in your specific business model and market position.
When rates consistently exceed industry standards, take a close look at your processor’s markup structure, transaction downgrade patterns, and any hidden fees that might be inflating your costs.
Additionally, consider whether your current processor truly understands the unique needs of auto dealerships, as specialized expertise can make a meaningful difference in optimizing your processing costs.
While conducting internal audits is valuable, partnering with a payment processing expert can provide additional insights and savings opportunities. This can include third-party auditors or a provider who offers specialized expertise in dealership payment processing and transparent pricing, such as RevUpX.
RevUpX brings over 100 years of combined experience working with industry giants like American Express, Fiserv, and CardConnect. Their zero-fee credit card processing program helps dealerships eliminate processing fees while maintaining high service levels and ensuring compliance with all regulations.
Key benefits of partnering with RevUpX include:
Also, for more on selecting the right payment processor for your dealership, see Why Your Payment Processor Matters (Not All Payment Processors Are Created Equal).
Make fee monitoring a priority in your dealership’s financial management strategy. A simple but consistent approach to auditing your processing fees can prevent thousands of unnecessary costs from eating into your profits over time.
Implement a regular audit schedule (quarterly or semi-annually) to ensure your fees remain competitive and align with your processing agreement. This proactive approach helps identify issues early, maintains transparency with your processor, and ensures you’re not caught off guard by gradual fee increases or unexpected charges.
Auditing your credit card processing fees is not a one-time task. By consistently reviewing your statements, understanding the components of your fees, and negotiating effectively, you can save your dealership thousands of dollars annually while maintaining a robust payment processing setup.
Contact RevUpX today to learn more about their transparent pricing, zero-fee processing solutions, and how their expert team can help your dealership better manage processing costs and boost profitability.