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The Difference Between "Tiered" Pricing & Interchange Plus


Is Your Business Receiving the Best Rates Possible???

It’s Time to Take a Closer Look...

Call (800) 297-2139 For Your Free Analysis

1.Market Analysis

The easiest way to figure out if you are receiving the best rate possible is to participate in our Free Rate Evaluation. Simply use the backside of this page as a cover letter and fax 3 months processing statements to 888-448-7402fx. We will respond within 24 hours with a complete market analysis to determine if your business is being charged properly and fairly. Merchants are usually unaware and often surprised by the number of erroneous or “garbage” fees that we are able to detect during these evaluations. Since our analysis is free and there is no obligation to sign up, you have nothing to lose and potentially lots to gain.

2.The Difference Between “Tiered” Pricing and Interchange Plus Pricing At the core of merchant account rates are something called interchange reimbursement fees. Before you can understand how fees are assessed, you need to understand what interchange is and how it's applied to different credit card transactions. “Interchange Fees” are essentially wholesale merchant account rates for various types of credit card transactions. Notice I said "types of credit card transactions." There are literally hundreds of different interchange categories between Visa, MasterCard and Discover. You don't have to memorize this fee schedule to grasp merchant account pricing, but it is important to understand that there is no single merchant account rate.

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Why Interchange Plus Is The Best Pricing Plan For Your Business Traditionally, Interchange Plus pricing accounts have only been available to businesses that do a high volume of credit card sales — usually $100,000 or more. However, the market for merchant accounts is more competitive these days, and now smaller businesses (and even brand new ones) can get accounts that work on this pricing structure. It’s straightforward, with only two rates from the credit card processor to consider: the interchange markup percentage fee, and the transaction fee. Merchants pay a consistent, flat fee regardless of the wholesale “interchange”processing rate, plus a small fee per transaction. So, if your business is setup on Interchange Plus pricing and has a merchant account with a 0.30% rate and a $0.10 transaction fee, you pay the wholesale interchange fee, plus 0.30% plus 10cents. In essence, the wholesale rate (with the processor’s markup) is passed directly to the merchant, so your transaction fees are calculated on their actual wholesale cost. Interchange-plus pricing is the most transparent way for a merchant to know exactly what Visa and MasterCard are charging (which is not negotiable)and what their ISO/processor/acquirer is charging (which is negotiable).

3.How to Calculate an Effective Rate

It's pretty simple to calculate the effective rate for an existing merchant account. Just divide your total Visa and MasterCard fees from your total Visa and MasterCard Sales for a given month. Example: $329 Total V/MC Fees Divided by $10,000 in processing volume =.0329 or 3.29%. Typically, a good effective rate for a retail business will be between 2.50% & 3.25%. If your effective rate ends up being substantially greater than 3% it’s time to take a closer look!

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