Merchant Service Pricing Secrets Explained

The game is stacked against you behind the scenes by grandmasters

An overhead expense for most businesses - if you accept plastic for goods or services - is your merchant service account. Although you are probably well aware of this business expense when you open your statement each month, it is difficult, if not downright impossible to accrue the best deal if your merchant service provider (MSP) does not keep you in the loop regarding costs.

Interchange-Plus Pricing: Making the Smart Choice for your Business

When choosing a merchant service provider, ask yourself these two important questions.

• Have you been informed about qualified versus mid or non-qualified fees and how these fees affect your monthly statement?
• Are you aware that a pricing program is available – known as “Interchange Plus” Pricing - that could potentially save you a pretty penny over the standard “3 or 4 Tier” Pricing program quoted by most MSPs?

Truly ethical MSPs will offer their customers “Interchange-Plus” Pricing; this fully transparent pricing method involves taking the “real cost” charged on each card type (the Interchange rate), plus the MSP’s associated additional costs in processing the transactions, plus a “set profit margin” negotiated between the merchant and the merchant service provider.

Why would this pricing scheme be less expensive? In a nut shell, a fair proportion of a merchant’s sales fall into the mid to non-qualified categories or tiers – which are substantially higher than the quoted “discount rate” Furthermore, non-pin based debit card transactions have set interchange categories just like credit cards. Most MSPs are not providing to the merchant the true difference in cost between their debit card and credit card transactions. In the case that the MSP does provide a lower rate for debit card transactions -- the merchant is only seeing the difference in one or two interchange category(s) (CPS / Merit III transactions).

Don't be mislead. Historically speaking, larger companies have been the only ones to benefit from Interchange Plus pricing. Don’t be misled by the assumption of many that the Interchange Pricing model is reserved ONLY for large companies like national retailers.Small businesses can also benefit. It’s just a matter of locating a merchant service provider that will work with you.