Best credit card terminal2/19/2023 ![]() ![]() This payment processing rate plan itemizes costs by listing Interchange rates and markups separately. IC-plus is a combination of the wholesale cost to run a transaction (Interchange) plus your provider’s markup. This is the most transparent credit card processing plan with clearly outlined fees and terms. That means more expensive transactions for you, and a larger profit for your provider. Given the lack of regulation, your provider has free range to shift transaction types into any tier. Though a Tiered rate plan is simple on the surface, it makes it very difficult to understand your provider's fees and determine which tier you should truly be paying. The majority of businesses are on Tiered rate plans, so odds are you’re on one too. For example, if you key-in a debit card but fail to check the Address Verification System, the transaction can downgrade to Non-Qualified, resulting in a higher rate. However, because Tiered pricing is unregulated, some providers will take advantage of this setup and bury excessive markups.Īnother downside to this payment processing rate plan: Transactions that don't meet their intended tier criteria can be downgraded to a more expensive tier without notice. This plan isn’t necessarily bad because it’s simple to understand. The higher the risk or reward, the higher the cost. Ultimately, the tier a transaction falls into depends on the level of risk or reward associated with the card. This rate plan bundles transactions into three different tiers (Qualified, Mid-Qualified and Non-Qualified) based on certain criteria. ![]() However, because Payment Facilitators do not underwrite their customers before on-boarding, Flat pricing is a good option for new businesses looking to start processing transactions right away. As businesses grow, they tend to move away from Flat pricing plans. If you run a large transaction or process a high monthly volume, you’re at risk for long-term fund holding. This payment processing rate plan is not the best credit card processing plan for businesses processing high volume. Flat pricing is unregulated and often increases processing costs, especially for debit card transactions, as you can see above. Because each facilitator works off of a single merchant account, they can’t offer different credit card processing rates to their customers - hence Flat pricing.įlat pricing is a mix of rates and fees that, together, create one fixed rate regardless of card type or transaction method. Flat pricing is only offered by Payment Facilitators (PayPal, Stripe, Square) who essentially lend out their own merchant accounts to anyone needing to process payments. The first thing you should know about a Flat rate plan is it’s not the best credit card processing plan for traditional merchant accounts. Now let’s get into the nitty-gritty of each rate plan. Visa, MasterCard and Amex publicly post their Interchange fees. This cost is posted by each card brand to its website. It’s important for you to know that all credit card processing rates start with the wholesale cost (Interchange) to run the transaction, which varies based on card type and method of transaction. Here are the pros and cons of each rate plan: But, depending on your processing volume and how established your business is, Tiered or Flat may be a better fit than IC-plus. IC-plus offers the best credit card processing rates on the market. For the sake of this post, we're going to focus on the three common plans we initially mentioned. Unethical Merchant Account Providers will put businesses on variations of another rate plan called Billback, which we recommend you avoid all together. ![]() There are three common rate plans: Flat, Tiered and Interchange-plus (IC-plus). To fully understand the impact a payment processing rate plan has on your bottom line, you need to understand your rate plan options. When it comes to accepting credit cards, we know cost is always a concern for business owners. ![]()
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