Interchange Plus Pricing v.s Tiered Pricing

Interchange Plus Pricing v.s Tiered Pricing
By:admin
Catagory: General

credit card payment processing

 

 

Credit card processing is an essential part of any business, but it can also be a complex and confusing process. One of the most important decisions a business must make when it comes to credit card processing is choosing the right pricing model. The two main pricing models used by credit card processors are Interchange Plus and Tiered pricing.

Interchange Plus pricing is a pricing model that separates the fees charged by the card networks (interchange) from the fees charged by the processor. This means that businesses can see exactly how much they are paying for each transaction. On the other hand, Tiered pricing, also known as bundled pricing, groups all of the fees together into a single rate for each transaction, making it difficult to understand exactly how much you’re paying for each transaction.

Here are some key reasons why Interchange Plus pricing is the better option for businesses:

  1. Transparency: With Interchange Plus pricing, businesses can see exactly what they are paying for each transaction. This allows them to identify any potential issues or areas for improvement in their processing costs. With Tiered pricing, it can be difficult to understand how much you’re paying for each transaction, as the fees are bundled together into one rate.
  2. Cost savings: Interchange Plus pricing can be less expensive than Tiered pricing. This is because Tiered pricing often includes markups on the interchange rates, which can add up over time. With Interchange Plus pricing, businesses can see exactly what they are paying and can negotiate lower rates with their processor based on their specific needs and processing volume.
  3. Flexibility: Interchange Plus pricing allows businesses to adapt more easily to changes in the payments industry, such as the emergence of new technologies. Tiered pricing, on the other hand, can lock businesses into outdated pricing structures, which can make it difficult for them to adapt to new developments.
  4. Future-proofing: As the payments industry evolves and new technologies emerge, Interchange Plus pricing allows businesses to adapt more easily. Tiered pricing can lock businesses into outdated pricing structures, which can make it difficult for them to take advantage of new technologies and innovations.
  5. Control: Interchange Plus pricing gives businesses more control over their processing costs. Businesses can monitor their costs and make adjustments as needed, rather than being at the mercy of unpredictable bundled pricing.

It’s important to note that Interchange Plus pricing can also have some downsides, such as the possibility of additional fees, and the need for more monitoring and management. However, the benefits of Interchange Plus pricing far outweigh the downsides, making it the better option for businesses.

In conclusion, Interchange Plus pricing is the better option for businesses because it provides greater transparency, cost savings, flexibility, future-proofing and control. It’s important for businesses to understand the difference between Interchange Plus and Tiered pricing and to carefully review the fees and terms offered by different processors. By doing so, businesses can ensure they are getting the best deal and that their payments infrastructure is set up for success. If you’d like to learn more, please contact Centurion Payment Services today to learn more and get set up with the pricing model best for your business.

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