Interchange vs. Tiered Pricing: Which is Best?

Kevin ToddMerchant Processing

processing fees
interchange rates

Interchange vs Tiered Pricing

The fairest model out there when it comes to credit card processing is Interchange-plus pricing versus Tiered Pricing. Why? Because it works by adding an invariable, flat margin on top of the Interchange rate (aka the rate that Visa, Mastercard, AMEX, or Discover charges them). When your service is priced this way, it is more transparent, and you know exactly how much profit the merchant account service provider is making on any given swipe.

Tiered pricing is broken down into 3 categories; “Qualified”“Mid-Qualified”, and “Non-Qualified”. The issue surrounding tiered pricing is each card can be evaluated and categorized differently by individual merchant account companies without explanation, thus leaving business owners guessing why fees are higher than expected. As a business owner you are not able to predict your credit card transaction fees, and this typically does not reflect your agreed upon contract. 

Another problem with tiered pricing is that the rate you believe you are getting, isn’t what you’re getting. This misdirection happens by a credit card processor having you look at the lowest rate, aka the “Qualified Rate” and ignore the other two pricing tiers mentioned above. Confused? So are we. That’s why the tiered pricing method needs to be put in the dumpster today so you can focus on growing your business!

Because Merchant Match Charity believes in full disclosure, we do our best to do what’s best for you and your company. Having a proper knowledge of the Interchange rates ensures that you accept cards the smart way.

MMC is proud to donate a portion of the processing fees to local charities in your community. We offer POS Systems, terminals, eCommerce gateways, and mobile devices for your business.

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