Credit Card Processing Fees: 3-Tiered VS. Interchange Plus
Posted by: Curtis Stevens on March 16th, 2010

The battle is on, which credit card processing pricing plan should your business be using?  3-Tiered pricing or Interchange plus?  This is the question many larger merchants may be asking themselves, including merchants that process $10,000+ a month in volume.  Before we go into the details, here are the basics: Visa & MasterCard have several dozen rates known as Interchange that determines the rate a merchant must pay for a particular transaction. The applicable Interchange rate is determined by various circumstances, such as was the card swiped, keyed-in with(out) AVS, is a business, corporate or reward cards.

3-Tiered Pricing VS. Interchange Plus Pricing

Under the 3-tiered pricing plan, you pay one of three rates called Qualified, Mid-Qualified & Non-Qualified. The rate you pay for each transaction is determined by the applicable Interchange rate. Under the Interchange plus pricing plan, we simply pass along actual Interchange cost and add a set markup to every transaction.

The chart below should demonstrate the concept and make things clearer.

Are you currently paying 3-tiered credit card processing rates and want to know how to compare this to the more cost effective Interchange plus plan? The following example should make things clearer. Lets say you decided to go to the grocery store and purchase 3 oranges. The prices for all of the available oranges are listed below. The ones you selected are Orange 1, Orange 5 & Orange 8.
The Orange prices below represents Visa & MasterCard Interchange cost.
Orange 1 costs $0.01
Orange 2 costs $0.02
Orange 3 costs $0.03
Orange 4 costs $0.04
Orange 5 costs $0.05
Orange 6 costs $0.06
Orange 7 costs $0.07
Orange 8 costs $0.08
Orange 9 costs $0.09
Orange 10 costs $0.10

In this example under a 3 tiered pricing plan you would have paid a total of 30¢ with the following credit card processing rates: (5¢ qualified, 10¢ mid-qualified & 15¢ non-qualified). This is calculated as follow: Orange 1 would be qualified at 5¢, Orange 5 mid-qualified at 10¢ and Orange 8 non-qualified at 15¢.

Lets assume’s markup in this example is 5¢. Under the Interchange plus pricing plan, you would have paid 19¢ total. This is calculated as follow: Orange 1 at 1¢ + Orange 5 at 5¢ + Orange 8 at 8¢ = 14¢ + our 5¢ markup, making a grand total of 19¢.

What is’s Offer?’s markup under the Interchange plus program varies based on your business type, average monthly volume and transaction size. Please call or email us for a rate quote and let us know you are interested in the Interchange plus pricing program.

Did this post make things clearer for you?  Please leave your comments and let us know.

  1. Jason Richichi says:

    We are going to change our merchant services to a new company. What is your interchange plus program for a healthcare business that charges $5k-$10k per month.



  2. Hi Jason,

    Are you asking for our markup on top of Interchange? Can you please give me a call and I would be more than happy to give you a pricing quote. You can reach me at 800-605-3972 X 111

    Curtis Stevens

  3. Hello

    I have two restaurants that process between 50000 and 60000 in credit card transactions per month. My first store does about 3/5 of the business and the other does the remaining . My first restaurant has about a $1200 per month fee and the second has a $ 750 a month fee.. Do you think that you can beat these fees ?? Give me a call if you think you can ..


    Hassell Rather

  4. Why would the supermarket sell oranges so cheaply? After paying their credit card fees, they apparently got nothing for the oranges! It’s a very strange example you give and it does not make anything clearer.

  5. James,

    It it simply an example to explain the math and not meant to take it literally.

    Curtis Stevens

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