The Three Pricing Models For Handling Credit Card Processing Costs

The average credit card processing fees you spend will heavily vary surrounding the unique pricing model you follow. There are three distinct pricing models you can follow when managing your credit card processing costs. These are unique setups that will help you plan what you’re managing when handling cards, but you should look at how you’re going to accept these cards yourself before you start. 

Interchange-Plus Pricing

The first option is interchange-plus pricing. You will pay the interchange rate for a transaction plus an additional fee.

The interchange rate is the fee you will spend on a credit or debit card transaction. A card company will charge this to cover the risk associated with a charge.

The average credit card processing fees you’ll find will vary by each card. Visa, MasterCard, and Discover have interchange rates close to 2 percent on average. American Express has a higher average rate at 3 percent, although the company’s unique platform is a part of this point. Amex operates as its own bank, facilitating the need for higher rates.

The additional charge you’ll spend will vary surrounding whoever you hire. You might spend an additional fee of 0.25 percent plus 10 cents on a transaction to go along with the interchange fee, for instance.

Flat-Rate Pricing

The second pricing platform to note entails flat-rate pricing. A processor will charge a fixed percentage of each transaction and then add a small fee for each deal. For example, you might spend 2.2 percent plus 30 cents on each payment you process.

The pricing model ensures you can predict what you will spend on credit card processing costs. But there’s also a lack of flexibility associated with the platform. You might spend significantly more money to process a non-reward credit card or a debit card than what you might expect. You’d have to review the types of cards you routinely accept before sticking with a pricing model you can follow.

Tiered Pricing

Tiered pricing is more complicated, as it entails unique pricing structures based on different types of transactions. Some transactions may be charged a lower rate depending on how much money someone spends. The types of products or services one orders may also influence the rate.

Each merchant service provider that offers tiered pricing will have unique terms for how each tier works. You’d have to note what transactions you regularly complete versus the pricing tiers in your program before making the right call on what works. The terms surrounding what works for each tier will vary. The rates can also be dramatically different depending on what tiers you follow.

Check Each Deal First

Be sure when reviewing the pricing plan a processing company uses that you can afford the credit card processing costs in that deal. You may benefit more from one option than another. But the terms for each option will vary, and you might benefit more from some choices than others. Noting what works in the review process is critical to your success.

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