Card Processing Made Simple - Interchange Plus Pricing vs. Tiered Pricing

There are several ways that a credit card processor can charge you for your card processing. Two of the most common card processing structures are interchange plus pricing and tiered pricing. The COA-endorsed merchant card processing system of Heartland Payment Systems employs the interchange plus structure. 

What’s the Difference Between Interchange and Tiered Rates? 

Interchange Plus, also known as cost plus, consists of your interchange (or wholesale) fees, which are predetermined by MasterCard, Visa, Discover and AMEX, plus a mark-up fee, e.g., discount rate, determined by the processor. Having interchange pricing allows you to simply, accurately and transparently calculate the cost of your processing. There are dozens of card types with interchange rates that vary between .05 percent and 2.95 percent. At Heartland, we pass through these rates from the different cards brands to the merchant, at cost, then add a fixed discount rate, or mark-up fee, to each transaction.

Tiered Rates can sound simple and appealing, but can end up costing merchants hundreds and even thousands of dollars. This structure of pricing normally fluctuates between three or more categories known as “tiers.” Most merchants on tiered pricing will notice three or more categories on their merchant statements: a qualified rate - usually 1 percent – 3 percent; a mid-qualified rate - usually 2 percent – 3 percent; and a non-qualified rate - usually 3 percent – 4 percent. 

Note: The processor gets to not only determine the rate for each tier, but also determines what cards are qualified, mid-qualified and non-qualified. Thus, the potential for high processing costs under a tiered pricing structure is significant!

It can be difficult for a merchant to save money on a tiered pricing structure. As a business owner it can also be challenging to understand these pricing models to make informed decisions, but in the vast majority of instances, it is better to be on interchange plus pricing than tiered pricing.

Heartland Payment Systems only uses interchange plus for its pricing model. Heartland believes it is the only transparent card processing model that lets you, the business owner, know exactly where each dollar of your card processing fees is going.

To find out how a relationship with Heartland Payment Systems can make your card processing more cost-effective and transparent, please contact Bill Wetmore, territory manager, Heartland Payment Systems, at 707-338-7195 or email bill.wetmore@e-hps.com

Heartland Payment Systems offers member-only rates on COA-endorsed merchant card processing and payroll services. By using Heartland, you will be able to save money, save time, increase profits and simplify your business operations. Begin saving now by contacting Bill Wetmore of Heartland at 866-976-7101 or Bill.Wetmore@e-hps.com.