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Rates: What You Are NOT Being Told!

Merchant Service Providers have become very sneaky when it comes to pricing rates for their clients. Why? Because they can be confusing, or because disclosing all fees may make the program look less attractive (ever heard the expression that ‘sometimes, less is more’), or because the sales person is only selling what he knows. At Credit Card Machine Store, you will learn ALL about rates, pricing, and what to look for. Our idea of showing this to you is to help you understand merchant services better. Since we do not hide rates and fees, we would like you to learn everything to help you make a very informed decision about which Merchant Provider to set up with.

Rates: Rates can often be very confusing. Merchant Service providers generally offer two types of credit card processing rates. They are Tier Rates and Interchange Plus. We will discuss both pricing models below.

Tier Rates: With this pricing model, you will receive a discount rate for general card types and the way you process the cards.  They are generally described below:

Swiped Debit Cards or Qualified Debit.  This tier is found when you accept a debit card by swiping it through your terminal and a customer’s signature is obtained.

Swiped Credit Cards or Qualified Credit. This tier is found when you accept a credit card by swiping it through your terminal and a customer’s signature is obtained.

Swiped Reward or Qualified Reward. This tier is found when you accept a reward card by swiping it through your terminal and a customer’s signature is obtained. (this tier normally falls into the Keyed or Mid Qualified pricing)

Keyed or Mid Qualified Credit and Debit. This tier is found when you accept a credit or debit card by using the key pad on your terminal or phone, or if you swipe a reward card through your terminal. If you are set up with a Retail Account, a signature may still be required. If you are set up with a Mail Order / Telephone Order account, a signature is not required with sale.

Corporate or Non Qualified Credit and Debit. This tier is found when you accept a credit or debit card that has been issued to a business or corporation, an international credit or debit card, or if you use the key pad on your credit card terminal or phone to enter the sale and do not enter in the correct Address Verification (AVS) information.

Transaction Fee. This fee covers all communication costs between the card issuing bank, your processor, and your terminal. A transaction fee is a set dollar amount, typically between $0.20 and $0.30 depending on your business type and processor.
This pricing model is the easiest to understand when looking at your monthly statement because each charge type represents a rate.  The tiered plan is often not fully explained by MOST Merchant Service providers. Most providers will only disclose the Qualified Debit and Qualified Credit because they are the lowest rates. By only offering the lowest rates you will see, their program suddenly seems very attractive.  Be sure you find out the rate for each category described above. As well as all of the other monthly fees that may come with your account.

Interchange Plus: With this pricing model, you will receive the Merchant Service provider’s cost to process credit cards. The cost is established by MasterCard and Visa. Please visit: MasterCard Interchange and Visa Interchange for itemized breakdown of actual Interchange.

If you took a moment to review both MasterCard and Visa’s interchange, you have realized that it can be confusing and that there are many rates for many different charge types. Generally, what you should gain from reviewing the Interchange Guides is that all processors costs are the same. That being said, Interchange cannot be negotiated. But, now you know what each card type’s cost is.
The next part of Interchange Plus to review is the ‘Plus’ part. The Plus is the portion of the charge that your Merchant Service provider is charging you to provide the merchant account itself, carry risk for you to accept credit and debit cards, and move the money for you. This pricing model is also very easy to negotiate as you are simply negotiating one rate, not 3 or 4! Depending on the size of your business and the amount of risk you pose, you can get Plus pricing anywhere from 0.10% to 1.00% and $0.10 to $0.20 per transaction. The beautiful thing about Interchange Plus is that the pricing is transparent. You know exactly what you are paying for your merchant services. It also makes negotiation with future Merchant Service processors simple because you can compare your current rate to theirs. The sales person cannot try to confuse you or move numbers to make their program appear better.

Credit Card Machine Store strongly urges you to pursue an Interchange Plus program over Tiered Rates for two distinct reasons. First, if you negotiate correctly, you will get a much better effective rate. The second is that the fees are transparent. You will actually know exactly what you are paying!

Please use this simple worksheet to help you figure out all of your rate plans when receiving quotes.

Retail Business

Tiered Rates

 

Interchange Plus

 

Qualified Debit

 

Rate

 

Qualified Credit

 

Transaction Fee

 

Mid Qualified

 

Pin Based Debit

 

Reward

 

 

 

Non Qualified

 

 

 

Transaction Fee

 

 

 

Pin Based Debit

 

 

 



MO/TO Business


Tiered Rates

 

Interchange Plus

 

Qualified Debit

 

Rate

 

Qualified Credit

 

Transaction Fee

 

Non Qualified

 

 

 

Transaction Fee

 

 

 


Call Credit Card Machine Store if you have any questions on either pricing plan – 1-866-210-7871.

The Tiered Rate plan and Interchange Plus program is generally described as you just read above, but this description does not guarantee that every Merchant Service provider follows these general guidelines when pricing.

 

 

 

 

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