There are no service fees for merchants who use our service. The account for each customer will be established based on the type of business they operate. When other providers give you a set rate, oftentimes there will be additional fees that won’t be disclosed. In many cases, the set rate they give you is only for transactions which are qualified. They will often neglect to mention the rates for transactions which are mid-qualified, as these will higher, and non-qualified transactions will carry the highest rates.
The Effective Rate
This is one of the most important rates that are assessed for credit card transactions. The effective rate is the total sum of the fees, such as the processing fee, interchange and statement fee. All these fees will be divided by the complete volume that has been processed for the month. For instance, if a merchant makes $55,457.81 in credit card payments within a single month, and the fees they were charged come to $1,121.27; their effective rate would be 2.02%.
This is important, because when a provider tells you that you will be charged 1% for your credit card transactions, it sounds great on paper, but if this 1% doesn’t include other charges such as fees for customer service, statements and other charges, your effective rate could actually be much higher than you think.
Many merchants don’t understand that Interchange rates cannot be waived. The reason for this is because the costs are passed through Visa, Discover, MasterCard and other credit card companies. The only fees that a merchant can negotiate are the fees for processing. Many unscrupulous providers will deceive merchants, quoting them a set fee that does not include all the additional charges they will incur.
Interchange plus Pricing
The rates we set for our customers are based on Interchange plus Pricing. Unlike the pricing structure offered by other providers, which are opaque, Interchange plus Pricing is highly transparent. Interchange plus is a pricing model for merchant accounts. A fixed markup will be added to the interchange fees directly. It allows for merchants to determine the true cost of processing credit card payments. The acquirer will negotiate a rate based on a number of different factors, including the merchant’s sales volume, their national or worldwide traffic, and the risk that is involved with the industry they operate in.
It is helpful for merchants because it passes the specific interchange cost for every transaction to the merchant directly, with a small fee for processing. This makes calculating it easy. Should a merchant using Interchange plus Pricing be priced near 30 basis points and .10% for each transaction, to determine their processing fees all they would have to do is multiply the complete volume by 30 basis points and the amount of transactions by .10. Interchange plus is commonly used among merchants operating in the U.S., and is seen as being a very reliable pricing model because it gives merchants a greater understanding of the fees they are being charged for accepting credit card payments.