Merchant Service Rates & Pricing Methods

When it comes to credit card payment processing, there are two main types of pricing offered by merchant banks to their customers: tiered and interchange-plus. Traditionally, interchange-plus pricing has only been offered to businesses that do a high volume of credit card transactions each month. However, this is changing, as Leap Payments is extending the benefits of interchange-plus pricing to all companies.

Some fees are paid as a percentage of the gross credit card transaction. Others are set fees paid for each transaction. Many businesses also pay flat fees for services such as account statements and member fees.

Tiered Pricing

The most common fee schedule offered today is tiered pricing. This is a sliding scale of fees based on a variety of factors, such as what types of credit cards are being used, which transactions are being processed by the credit card merchant service, and the type of business accepting the card.

These factors can make it very confusing for a business to calculate how much they will be paying in credit card transaction fees every month. If you’re on a tiered structure, you typically have one rate that your provider openly discloses, and then “downgrades” appear in a separate section of your statement bundled together. This makes it almost impossible to determine the exact rate charged for each transaction.

At the same time, different card processors provide very different amounts of information to the business about how each transaction is processed on tiered structures. This can make your goal of reducing your fees almost impossible, as well, as you are not given complete information about what you are paying for every transaction when you’re on a tiered structure.

Since growing your business requires you to have full control of your finances, this structure can end up doing more harm than good. Especially for those companies considered “high risk,” tiered pricing can end up placing more fees and restrictions on a merchant account. This results in not only potentially higher rates but also uneasiness in not having the transparency a business owner needs to best plan for the future. Companies need and deserve to have pricing from their credit card processor that helps support their business goals.

Interchange Plus Pricing

The second type of fee structure is interchange-plus pricing. This type of rate is essentially the amount charged by the leading credit card brands on credit card transactions, plus a flat markup by the merchant bank. This is a more transparent and typically more affordable solution for businesses.

So, what is interchange-plus pricing? To understand this question, we first need to analyze how bankcard processing works. Merchant banks serve as the intermediary between businesses and credit card companies whenever someone uses a card to make a purchase or payment. In exchange for performing these services, merchant banks receive a fee on credit card transactions—usually paid by the business.

However, it’s a pricing structure that has typically not been made available to customers with a small business merchant account—because of the low volume of business they do in credit card transactions each month, most merchant banks charge them the higher, tiered rate.

Other merchant account companies want to see high transaction volume so that they can be sure that they have money coming in. However, they unfairly increase fees on smaller companies and stifle their ability to grow. By keeping small business owners in tiered pricing, the system makes it harder to plan for monthly fees and other charges.

If this sounds unfair, then you need to consider Leap Payments. We offer interchange-plus pricing to all of our customers, eliminating the obstacles that keep small businesses from competing on a level playing field. By allowing small businesses to have access to the best processing fees when they accept a credit card online or through a terminal, we save small businesses thousands of dollars each year—money that can go into growing their own business.

This approach to pricing is important to us for two reasons. First, Leap Payments believes in continually working to earn the trust and business of our clients each month. Therefore, we work closely with small businesses on a credit processing solution that meets their individual needs—and the pricing structure plays a big role in this. Transparent pricing is open and honest, showing our clients that we are invested in their continued success.

Other Considerations When Picking a Merchant Service Provider

Second, we want to give high-risk companies and other small businesses the chance at processing they deserve, without extra and hidden fees each month. Interchange-plus pricing with guaranteed rates for the life of your account is what you get with Leap Payments.

The idea that the best rates and pricing structure should be reserved for businesses that have a large volume of transactions just doesn’t make sense. Leap Payments wants to make sure that your small business has the processing services it needs to accept credit cards, to make it easier for your customers and clients to pay for goods and services, and to make it so you have capital that you can put back into your operation.

You can learn more about the benefits of interchange-plus pricing with Leap Payments by contacting a representative today.