The battle is on, whichpricing 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 Gotmercant.com’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 Gotmerchant.com’s Offer?
Gotmerchant.com’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.