| Traditionally small to mid sized businesses | | | | ensure profit if they charge a large mark up |
| have been set up with what is called | | | | for any transactions that are not qualified. |
| multi-tier pricing for their credit card | | | | So you may pay 2.9% for a mid qualified |
| processing. This system is usually set up | | | | transaction and 3.5% for a non qualified |
| with three tiers (qualified, mid-qualified, | | | | transaction (These numbers can range much |
| and non-qualifed.) Occassionally, if the | | | | higher and lower.) |
| business owner has negotiated well, there | | | | |
| will be a fourth tier for qualified offline | | | | The fact is that some of the cards that fall |
| debit cards. While this system has worked | | | | into these categories may only cost an |
| well for many years, the increasing number of | | | | additional quarter of a percent to process. |
| rewards and corporate cards being issued has | | | | So the merchant may over pay by 1-2% to run |
| made this type of pricing obsolete. | | | | certain card types. The business owner can |
| | | | avoid this if they are set up on interchange |
| Visa and Mastercard have many different | | | | plus pricing. |
| interchange categories for the multiple card | | | | |
| types that are issued. Tier pricing takes a | | | | What interchange plus pricing does is pass |
| large number of these categories and lumps | | | | the true cost of running the card right |
| them into one of the three tier buckets | | | | through to the merchant. So the fees |
| available to the merchant. If the merchant | | | | associated with that individual transaction |
| only ever takes standard credit cards then | | | | will be put through at the lowest possible |
| this system will work well for them. Once | | | | cost. The business owner pays a mark up at |
| they start to see more debit, rewards, and | | | | the end of the month based solely on their |
| corporate cards being used in their place of | | | | number of transactions and the sales dollar |
| business they will notice that their merchant | | | | volume. (typically .25-.50% plus $.10-$.15 |
| services bill has increased dramatically. | | | | per trnasaction.) |
| This is because many of these transactions | | | | |
| are falling in to the mid or non qualified | | | | This system will almost always prove to be a |
| transaction categories. | | | | better deal than a three tier structure. |
| | | | Make sure to check your latest credit card |
| Some of these cards are actually not that | | | | processing statement to look for a high |
| much more to process than a standard credit | | | | number of mid or non qualified transactions. |
| card, but the underwriting company for the | | | | If you see them, then setting up an |
| merchant account needs to make sure that they | | | | interchange pluse pricing system may be the |
| are profiting on every transaction. They can | | | | way to start saving your business money. |