An Interchange Plus Pricing Structure Can Greatly Reduce Your Credit Card Processing And Merchant Account Fees.

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