If your business accepts credit cards, it’s important to know which credit card pricing model is right for you.
While there are many methods to process credit cards, not all of them are going to be profitable for your business.
Many merchant service providers overcharge for credit card processing, while others don’t display their rates at all. For this reason, it’s crucial to know exactly what you are paying to process credit cards. There shouldn’t be any hidden fees or surprise payments.
Whether you currently process credit cards, or want to learn how to start accepting credit card payments, your rates and fees should be simple and clear.
Use this guide to compare credit card processing rates to determine which credit card pricing model is best for your business.
Compare Credit Card Processing Rates
Flat Rate Pricing
Flat rate pricing is ideal for businesses that want a simple and clear pricing structure.
Flat rate pricing eliminates surprise charges. Your merchant services provider will give you a straightforward statement that makes it easy to see exactly how much you paid in credit card processing fees each month.
With flat rate pricing, businesses can pay the same low monthly rate for each transaction regardless of credit card type without any additional transaction fees.
Interchange-plus is a transparent pricing model that provides 100% clarity on all payment processing costs.
There are over 350 different types of credit cards, each with its own unique interchange rate. With interchange-plus pricing, processing rates assigned by card issuing banks are passed unchanged directly to your business. You can achieve the lowest fees for each transaction on corporate, commercial, business, government and purchasing cards.
This credit card pricing model can sometimes be difficult to understand, as it takes time to learn the different rates for each type of credit card. To get the most out of your merchant services, choose a payment processor that can help ensure smooth and efficient transactions.
Interchange-plus pricing provides your business with flexible processing, and the ability to achieve the lowest credit card processing rates based on the types of card you accept.
Tiered pricing was originally created as a simple way for merchants to process credit cards. While tiered pricing is the most common pricing model, it can also be the most expensive.
Tiered pricing takes interchange rates set by the card issuing bank and places them into tiers, and each tier comes with its own set of transactions fees.
Transactions are typically billed under three general categories:
- Qualified (Non-rewards credit cards and debit cards)
- Mid-Qualified (Manually entered consumer and debit cards)
- Non-Qualified (Commercial, international and rewards cards)
However, tiered pricing doesn’t provide any details or flexibility regarding credit card processing fees. For example, a credit union debit card (usually a low interchange rate) can be billed using a rewards card rate (one of the most expensive).
Since there are no set guidelines to determine which category a card is placed under, mismatching often occurs, and businesses can get overcharged for credit card processing fees.
Protect Your Payments
There are many ways to process credit cards, but not all of them are created equal. Compare credit card processing rates to safeguard your finances, and use a merchant services provider that offers simple, transparent pricing. By finding the right credit card pricing model, you can ensure the lowest processing fees for your business.