Pricing and Rates
Of course there are costs and fees associated with everything in business. That’s how the business world turns. You specialize in a market, provide a product or service, mark it up, and both businesses flourish while keeping costs as low as possible. That’s how we work! We don’t like paying extra fees for services either. Why would we ask you to do that?? Unfortunately, we operate in a business where the reputation for number twisting and hidden fees seems to be the norm. We see it too. When doing a rate quote for a potential new customer, we receive statements from other providers and we are amazed at how slippery some of the pricing is. We don’t operate like that. We disclose everything because we want to be in business with you for many years to come. I’ll explain the fundamentals but if you need more info or have ANY questions, just call us! That’s why we’re here. 877-804-3300.
PRICING METHODS:
So here are the basics. There are published interchange rates from Visa and MasterCard (links for each of these is below). This means all companies providing card processing services start with the same numbers. Credit card processing providers will typically price rates using cost-plus or what we call ‘tiered’ pricing. There are three classifications of a transaction; Qualified, Mid-Qualified, and Non-Qualified. If you are priced with tiered pricing, all of the 300+ interchange types and classifications are put into ‘buckets’. One bucket for Qualified, one for Mid, and on for Non. This can work for or against you. Given the wide variance of rates, you may have a transaction that is, cost-wise, an inexpensive transaction. However, your provider may have that interchange classification in a Mid-Qualified bucket which bumps your cost up to the mid qualified rate.
EXAMPLE: Let’s say you run a transaction for $100 and the actual interchange cost for that transaction type is 1.75+.10. This means the interchange cost would be $1.85. If your provider happens to have this particular interchange charge type placed in the mid-qualified bucket, here’s how the numbers will shake out:
Tiered: You have your qualified rate set at 2.30 + .10, mid-qualified is 3.10+.10, and non-qualified at 3.70+.10. The interchange cost on that transaction will end up being $3.20.
Cost-Plus: You have cost-plus .60 basis points + .10 as your rate. So you add the base rate, 1.75+.10, to the .60 + .10 basis points, and your interchange cost for the same transaction is 2.35+.20, or $2.55.
We prefer to price our merchants with cost-plus pricing. Since there are SO many interchange types, we know our merchants are not paying more than they should for transaction processing. You can’t always predict what type of card you’ll be taking, whether it’s a rewards card, a business card or a check card, but with us you know what you’ll be paying.
We are happy to talk with you personally if you want more info about the big, wide world of interchange and the cost of credit card processing to your business. Believe me, it’s a lot to understand even for some people in the industry so if you have any questions, don’t hesitate to call. (877) 804-3300.
You can view the published rates here:
Visa: http://usa.visa.com/download/merchants/october-2010-visa-usa-interchange-rate-sheet.pdf
MasterCard: http://www.mastercard.com/us/merchant/pdf/MasterCard_Interchange_Rates_and_Criteria.pdf
