How To Avoid Credit Card Fees: Smarter Payment Options For Contractors Explained

Key Takeaways

• Credit card fees typically cost contractors between 1.5% and 4% per transaction, adding up to thousands of dollars annually on project-based invoices.
• ACH payments bypass card networks entirely and cost a flat fee of $0.20 to $1.50 regardless of payment amount, creating massive savings on large invoices.
• Offering ACH as the primary option while keeping credit cards as a backup prevents lost business while recovering most processing fee losses.
• Most clients switch willingly to ACH when presented with a streamlined process at contract signing rather than at invoice time.

Credit card processing fees quietly drain thousands of dollars from contractor profit margins each year, yet many construction businesses continue accepting them as an unavoidable cost of doing business. The construction industry has been slow to adopt newer payment methods, but solutions designed for project-based businesses are making it easier to move away from expensive credit cards without losing payment speed.

What Credit Card Fees Actually Cost Contractors

Credit card companies charge contractors multiple layers of fees that add up quickly across large invoices, with interchange fees ranging from 1.5% to 3.5% per transaction. Assessment fees add another 0.13% to 0.15% on top of that base rate, and payment processors layer on their own markup.

These percentages become particularly painful on large construction invoices, where a single $50,000 payment could trigger over $2,000 in processing fees. Unlike retail businesses that process many small transactions, contractors often deal with fewer but much larger payments, making each fee significantly harder to absorb.

Why Negotiating Lower Rates Rarely Works

Many contractors attempt to negotiate lower rates with their existing processors, but these efforts rarely produce meaningful savings since card networks control interchange rates. Some businesses try passing fees to customers through surcharges or convenience fees, but this approach introduces complications that can damage client relationships.

Surcharge programs require careful compliance with varying state laws, proper disclosure on invoices, and separation of credit versus debit card transactions. Cash discount programs present another workaround where contractors advertise higher prices and offer reductions for non-card payments, but these require complex pricing structures.

A Smarter Way to Move Money Between Bank Accounts

Automated Clearing House transfers represent a fundamentally different payment method that bypasses credit card networks entirely, moving money directly between bank accounts through a federal network. ACH transactions typically cost between $0.20 and $1.50 per transaction, regardless of payment size, creating dramatic savings compared to percentage-based credit card fees.

A $50,000 invoice processed via credit card at 3% costs $1,500 in fees, while the same payment through ACH might cost less than $1. For contractors processing multiple large payments throughout the year, this difference translates to thousands of dollars in recovered margin that stays in the business.

Why ACH Works Particularly Well for Construction

ACH payments align naturally with how construction projects actually operate, making them easier to adopt than contractors might initially assume:

• Payment timing matches project milestones: Construction invoices follow completion stages rather than daily retail transactions, making the one-to-three-day ACH settlement window acceptable for most situations.
• Business transactions are already ACH-friendly: Most construction payments flow between businesses rather than individual consumers, and companies already use ACH extensively for vendor payments and payroll.
• Flat fees beat percentages on large amounts: ACH's flat-fee structure becomes increasingly advantageous as invoice amounts grow, while credit card percentages scale linearly with payment size.
• Fewer payment disputes: ACH transactions carry significantly lower dispute rates compared to credit cards, providing contractors with more payment certainty once funds clear.

Getting Clients on Board Without Creating Friction

Successfully transitioning to ACH-based payments requires offering it as the default payment method while still accepting credit cards for clients who prefer them. This dual approach prevents lost business while naturally steering most clients toward the lower-cost option without forcing anyone into uncomfortable situations.

Communication timing matters significantly, as introducing ACH payment options at contract signing rather than invoice delivery prevents surprises and allows proper setup time. Many contractors include simple ACH authorization forms alongside their standard contract paperwork, making the bank account verification process feel natural and routine.

Handling Questions and Concerns From Clients

Payment adoption patterns differ between residential and commercial clients, with commercial clients typically embracing ACH more readily since their accounting departments already process it. Residential clients may need slightly more education about the process, but most adapt quickly once they understand they're sharing banking information similar to autopay. Some contractors worry about payment delays compared to instant credit card authorization, but this concern stems from confusion between authorization and actual fund availability. Credit cards authorize instantly but typically take two to three business days for actual settlement into merchant accounts, which is nearly identical to ACH timing.

Making the Switch Easier With the Right Tools

Technology barriers have decreased substantially in recent years, with platforms built specifically for contractor payments handling the technical complexity of ACH processing, bank account verification, and payment tracking.