Interchange Plus Pricing vs Tier Pricing
Interchange Plus Pricing

Pros:
-The cheapest processing option overall.
-100 % clarity on all processing costs.
-More understanding of different card rates.
-Flat fees mean no surprises.
Cons:
-Takes some time to learn the different processing rates for each type of credit cards.
-Requires you to be more involved in your day-to-day card processing.
Tier Pricing

In Tier Pricing, all transactions are billed under just a handful of general categories, usually four:
-Debit aka. Check Cards
-Qualified (standard credit cards)
-Mid-Qualified (hand typed cards such as phone orders/mail orders)
-None Qualified (rewards cards, international cards, etc.)
Since there are no set rules or guidelines determining what cards will go under each category. Mismatching often occurs, and leads to millions of dollars being over charged to merchants per year.
Pros:
-A simple introduction to payment processing for the novice merchant.
-Minimal time commitment from the merchant.
– Zero learning curve.
Cons:
-Results in much higher processing costs overall.
-No details on what exactly the merchant is paying for.
-Zero understanding of industry card pricing.
Interchange plus vs. tiered pricing model. Which is better?
I strongly recommends Interchange Plus pricing, even to novice merchants. The enormous benefits over Tier Pricing, make switching to Interchange Plus pricing a smart business decision. As discussed, Interchange Plus provides merchants complete transparency, as well as the ability to easily analyze and understand their exact processing costs. This detailed information also allows the merchant to compare pricing programs among different merchant service providers. Of course, the biggest benefit of Interchange Plus pricing is it provides merchants a lot of flexibility, beyond the limitations of Tier Pricing. How? By not narrowing down so many different card types into just a handful of generic categories, transactions get processed more accurately- which leads to much lower processing rates on corporate, commercial, business, government, and purchasing cards. This benefit alone, leads to thousands of dollars in savings per year.
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