How do I understand payment processing pricing?
There are three types of pricing structure for payment processing:
- Tier Pricing
- Flat Rate
- Interchange Plus
Tier Pricing is priced based off the four types of cards:
- Debit (Regulated and Unregulated)
- Qualified (Personal and chip read)
- Mid-Qualified (Hand keyed/Online)
- Non-Qualified (Business/Corporate)
Typical pricing for Tiered rates:
– Debit = 1.35% plus $0.15
– Qualified = 1.8% plus $0.15
– Mid-Qual = 2.25% plus $0.15
– Non-Qual = 3.25% plus $0.15
Typical pricing for Flat rate:
– Debit = 2.75% – 2.9%
– Qualified = 2.75% – 2.9%
– Mid-Qual = 2.75% – 2.9%
– Non-Qual = 2.75% – 2.9% plus a surcharge of an average of .50% Total = 3.25% – 3.4%
Interchange Plus Pricing:
Interchange is the buy rate of cards given out by Visa, MC, Discover and Amex. In most cases this is the best pricing that a merchant can be set up on. There are dozens of different Interchange rates, they vary from .05% to over 3.5%.
Example; if a merchant was set up on Interchange plus .35% (35 basis points). If merchant accepted a customer’s card that had an Interchange (cost/buy rate) of 1.15%, the merchant would pay 1.5% on that transaction. If the Interchange was .05%, the merchant would pay .40% on that transaction. If the Interchange was 2.8%, the merchant would pay 3.15%.
No matter what the Interchange (cost/buy rate) of any card taken the merchant will pay .35% above the Interchange. There is also a per item fee, it’s typically $0.10 – $0.15 per item.
At PRIME Payment Processing we offer Interchange Plus Pricing as the best way to save you money and help you to understand your pricing. Give us a call so we can do an analysis for you.