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Credit Card Pricing for Businesses – It Doesn’t Have to Be Complicated

October 10, 2017

Man paying for his goods at retail store.

Credit cards are the most popular way to pay in the United States according to a 2016 US Consumer Payment Study. As a business, how do you know which credit card pricing model to choose? With the holidays around the corner, now is a good time to review. Cheri Perry, co-owner of Total Merchant Concepts, sums up three general models to credit card pricing in her eBook, The Ugly Truth About Merchant Services.

  1. Bulk Rate Pricing Models charge the same set percentage per transaction, regardless of card type or volume, which makes it the easiest to calculate. Since the percentage must be large enough to cover all rates, industry fees, and card types, this option can also be the most costly, depending on the business and volume.
  2. Tiered Rate Pricing Models typically give merchants four categories for transactions: check card, swiped credit card (qualified), keyed (mid-qualified or rewards cards), and corporate (non-qualified). Depending on the cards accepted and the way those cards are processed, this pricing model could save money over bulk rate pricing models (if priced properly) without being overly complicated.
  3. Interchange+Pricing Models give merchants access to all card types, which can be especially valuable for merchants who accept corporate or regulated cards that fall well below normal percentages charged for traditional credit or rewards cards. Since these statements outline every card type, accounting may need to reconcile a more simplified or complex statement on a monthly basis. If priced properly, this pricing model could provide the best overall processing rates.

TSYS 2016 U.S. Consumer Payment Study:

“What to Watch Out for When Looking for Merchant Services” document:

Total Merchant Concepts website: