Flat-rate, interchange-plus or tiered?

Flat-rate: a defined rate for a transaction category

With flat-rate pricing, a provider typically sets a percentage and sometimes a fixed transaction charge for a particular payment category. Online, keyed-in and in-person payments may have different rates.

The structure can be straightforward to read. Still, ask about recurring charges, international cards, disputes, refunds and any other exceptions. ‘Flat-rate’ does not mean every possible fee is included.

Interchange-plus: underlying costs and a separate markup

Interchange-plus separates underlying interchange from the provider’s markup. Network charges may also be passed through or itemized according to the agreement.

Ask the provider to show a worked example and identify every markup and recurring fee. The underlying cost can vary by transaction, so your total depends on your actual payment mix.

Tiered: transactions grouped into pricing categories

Tiered pricing groups transactions into categories with different prices. Names such as ‘qualified’ and ‘non-qualified’ may appear, but the classification rules are defined by the provider.

Request the criteria for each category. A quote built around only the lowest category may not represent the mix of transactions your business receives.

Ask these questions before deciding

Compare proposals using the same sales assumptions and full fee schedule. The lowest advertised percentage may not produce the lowest total cost.

• Which payment categories have different rates?
• What percentage and fixed charges apply to each transaction?
• Which monthly, equipment and software charges are separate?
• How do refunds and disputes affect my costs?
• What contract term and cancellation conditions apply?
• Can you calculate an example using my actual payment mix?