What Aren’t Credit Card Processors telling you?
The credit card processing industry can be filled with smoke and mirrors. Plenty of false promises of low or even zero fees, but to your surprise when your merchant statement arrives, it’s filled with charges that ‘weren’t suppose to be there’.
We are going to drive down into the details of every pricing model. We aren’t going to use cheap buzz words to try and convince you they are bad. We are going to use cold data to demonstrate the savings. While most processors will pretend they are the low cost provider, they’re lying.
We break down each pricing model and use real world numbers and go through each formula step by step. We’ll disclosing all fees and costs associated with each model. Follow along with your own financial data. All you’ll need is your average processing amount, average ticket size, and card distribution of qualified, mid-qualified, and non-qualified. If your not sure, request a free analysis of your merchant statement by clicking here.
What pricing model do you currently use?
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The Flat Rate pricing model is popular because it’s simple for merchants to understand. How it works is they charge a flat fee for all transactions processed. It doesn’t matter the card type; it all costs the same. For example a merchant will be charged 2.75% for all transactions. That is quite the overcharge, however these companies don’t generally have as many fees associated with processing. The flat rate model tends to be best for merchants processing very few card payments.
Recently, a new type of merchant services pricing has been making some noise. The Subscription pricing model sounds enticing because of their no interchange markup and low fees. However, the monthly subscription costs and higher per transactions fees drive their costs up.
Most major banks use a three-tiered system. They break the 300 different rates into 3 groups: Qualified, Mid-Qualified, and Non-qualified. Safe cards are processed in the Qualified section, riskier cards in the Non-qualified. This batch pricing leads to less overcharging but now has high fees included. Still not a great deal.
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