WHEN IT COMES to credit-card fees, bigger companies have more clout with issuers than small ones. But there are ways to minimize costly processing fees, from negotiating to shopping around. Here are eight tips.

Negotiate processing fees

To negotiate the interchange rate, which is set by Visa (V) and MasterCard (MA) accounts for about three-quarters of merchants’ card acceptance fees, business owners should contact Visa and MasterCard directly, says Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a group representing banks and credit-card networks. For other service fees including transaction processing, terminal rental and customer service, smaller firms should reach out to their bank — or, in the case of American Express (AXP) and Discover, a third-party acquirer.

Shop around

It is always worth it to check out the competition. “Negotiations between retailers and acquiring banks are proprietary, but I do know that there is nothing prohibiting anyone from negotiating a volume deal with the network,” says Wexler. Before making a final selection, compare the prices of at least three different providers in advance of opening a new location or renewing an existing contract.

Suggest – don’t require — purchase minimums

Requiring consumers to spend $10 or $5 before they can use plastic violates both Visa and MasterCard merchant guidelines. Although American Express and Discover don’t directly prohibit purchase minimums, they do require all credit cards be treated equally. A merchant can’t, for example, put price minimums on Discover transactions and not also put them on Visa and MasterCard transactions, says Jon W. Drummond, a Discover spokesman. To avoid violating credit-card agreements — and potential penalties — make purchase minimum suggestions.

Raise prices

The same general rules apply to surcharges for credit- and debit-card purchases. However, in addition, roughly 10 states, including California and Massachusetts, have laws prohibiting the practice. To avoid drawing the ire of card networks, state governments and customers, opt to raise prices across the board. But do so sparingly, as most consumers remain price-sensitive.

Offer discounts

You might also consider providing a discount on cash or other low-fee card purchases. Not only is this practice more palatable for the card networks, federal law actually allows merchants to provide discounts for cash purchases, says Shawn Miles, the head of global public policy at MasterCard. “If merchants are concerned about the cost of acceptance, they can offer discounts for cash or just not accept cards,” he says. Merchants can also offer discounts for other forms of payment, depending on the network. For example, Visa allows merchants to discount cash, checks and PIN debit purchases, while MasterCard allows for discounts on any debit purchases.

Pick lower-fee payment options

Of course, using cash is the cheapest way to pay. However, if consumers must use plastic, urge them to use cards that provide cheaper fees. For instance, Visa’s standard credit-card interchange reimbursement fee — the fee that merchants pay to acquirers that gets rerouted to card issuers — is 2.95%, plus a 10-cent transaction fee. The same transaction for debit-card purchases costs 1.90%, plus a flat 25 cents per transaction. Even asking customers to enter their PIN numbers, rather than signing for their debit-card transactions, provides savings, says Miles from MasterCard. In addition, rewards-bearing cards tend to be more expensive to process, as rewards typically require higher interchange rate fees, he says.

Offer prepaid reloadable cards

Like Starbucks (SBUX), small business owners can also consider offering shoppers reloadable prepaid cards. For a reloadable card that gets processed through Visa’s Prepaid Load Network, a cardholder’s financial institution is required to pay a retailer’s financial institution 5 cents each time a card is reloaded. Other fees are up to the card issuer. While some issuers may not charge any transactions fees, usage fees such as low-balance charges and inactivity and load fees may fall to consumers.

Seek alternatives

Visa and MasterCard may handle the bulk of card transactions but smaller, less expensive networks are increasingly popping up — especially online. AmEx’s newly acquired RevolutionMoney’s RevolutionCard, which is a PIN-based card that’s completely anonymous, charges 0.50% per transaction, no matter the size of the merchant. Even eBay’s (EBAY) PayPal, which neither levies monthly fees nor downgrade fees, can provide savings. “The only time you’re charged a fee as a merchant is you when you are actually charging a transaction,” says Eddie Davis, the senior director of small and midsize merchant services at PayPal.

—Write to Diana Ransom at dransom@smartmoney.com

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