Tiered Pricing Programs (3-tier)

We want to educate business owners on the different types of pricing programs when they open a Texas merchant account.  It is not just enough to ask “what’s my rate,” so you need to know what program you have.  This way we can talk “apples to apples” rather than “apples to oranges” and have you understand the rates better.

To start out, Tiered Pricing (or “bucket” pricing) splits different types of transactions into arbitrary “tiers,” with a different rate for each tier.  When you receive a quote for tiered pricing, processors will often quote the price from the lowest tier which usually makes up a very small portion of processing volume.  For example, advertisements for credit card processing will often say “rates as low as 1.35%!” without disclosing how few transactions will really qualify for that rate.  The downgrade fees are hidden in the fine print and not emphasized, although they often constitute the majority of a merchant’s transactions.  We ensure this does not happen when you open a Texas merchant account.

Interchange PLUS Pricing Programs

The Interchange PLUS pricing programs are the most transparent form of pricing because it’s clear how much of your total fees were due to interchange, assessments and our markup.

Interchange PLUS pricing programs pass along hard costs that are paid to VISA, MasterCard and Discover. The programs also add a very small markup to those costs to cover the risk associated with each transaction – the ‘plus’ in the name.

When a merchant accepts credit cards, there are many different ways those cards can go through the interchange system, each with a specific cost based on a number of different factors. These costs are called interchange fees, dues and assessments.  The Interchange Plus pricing programs are the best type of merchant pricing program that completely eliminates all Non-Qualified fees and surcharges associated with premium credit cards!

We utilize Interchange PLUS pricing programs to ensure all of our merchants benefit from lower costs.

Fixed Rate Pricing Programs

The simplest type of merchant account contract — fixed pricing programs — is structured with a single percentage-based and per-item for all transactions. Some alternative payment methods, such as Google Checkout, Square and Paypal, have fixed rate pricing.  Fixed rate pricing programs can be fair, if you can get them at a reasonable rate, but they are generally reserved for very small volume accounts (less than $3,000 per month).

What kind of pricing do you have?

Interchange PLUS pricing programs are usually the most cost effective option for business owners. With tiered pricing programs, processors often sneak in extra fees or excessively mark up the downgraded transactions in hopes that the business owner will not notice. Most tiered quotes also do not clearly disclose which types of transactions will fall into each tier. Some processors even add clauses into the contracts that allow them to change the structure of the tiers over time without informing the merchant!

Here are some ways to tell the difference between pricing programs:

Interchange PLUS pricing programs’ quote will look like this:  “Interchange PLUS 0.35% PLUS $0.15″ – the PLUS part is the processor cost and markup on top of Interchange.

With tiered pricing programs, usually just one price is quoted (called a qualified rate or discount rate). It will always be more than 1%. For example, they will quote 1.6% or 2.3%.  Often, the salesperson will not tell you about the Mid-Qualified and Non-Qualified rates unless asked—they count on making most of their money by marking up those rates very high without you noticing.

If you are still unsure, we will help you determine which pricing structure you have.

Ready to get started now?

We are ready to be your processor!  We look forward to assisting you with your needs in determining which pricing programs are best for you.  Please contact us today by emailing sales@texasmerchantaccounts.com or by filling out the short form on the right.