Pricing Format Options for Credit Card Processing

If you’ve worked with a credit card processor in the past, you know the basics of how this process works. You are charged processing fees or rates based on a few important factors, usually paid on a monthly basis. Did you know, though, that the format for your processing costs can take one of a few forms?

At Merchant Card Advisors, we’re here to help with credit card processing for small businesses, retail companies, government groups and many others. We can help you assess and understand which pricing structure is best for your business depending on a few elements. Here are the three most common pricing formats offered by credit card processors:

Flat Rate

With flat rate processing, your fees are very simple: You pay a single, standard number for every single transaction, no matter the size or card type. This number does not change at all, no matter what.

In most cases, the best situations to use a flat rate pricing system in will be those where your average ticket items are fairly low. If your average sale is under $15 or so, and you have a high volume of such transactions, this option often makes the most sense. Be careful about any extra fees here and how they change the math for you, however.

Tiered Pricing

Tiered pricing is a more complex process, one that includes combining interchange rates based on card brands with a few other important costs. Transactions fall into one of three tiers (Qualified, Mid-Qualified or Non-Qualified) that speak to what kind of card brands are being swiped plus how the transaction is processed (was it keyed or swiped?).

This may sound a bit complicated as we describe it, but it’s actually a smart system designed to help merchants easily see what they’re being charged in these three areas. It’s particularly good for businesses that don’t have huge volume, and can save them some extra money.

Interchange Plus

The newest of these options is Interchange Plus, which is legitimately complex but also helps cut down on less reputable processing companies that try to take advantage of their clients. It’s become easily the most popular format for larger companies that process lots of payments every month, and especially among those who have high-ticket items regularly being sold.

That said, Interchange Plus might be difficult to read on a statement if you don’t know what you’re looking for. The details are a bit too complex for this space, but speak to an advisor and be sure to review your statements carefully to ensure you’re getting what was promised.

For more on the different payment format options available to you within credit card processing, or to learn about any of our merchant payment processing services, speak to the pros at Merchant Card Advisors today.

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