![]() Instead, they are aggregators that use one merchant account to process transactions for thousands of businesses.Īs I’ll explain in greater detail below, this type of flat rate pricing is inherently uncompetitive because an aggregator has to ensure its flat rate is high enough to cover all possible base costs associated with interchange and assessments as well as its markup, and base costs vary greatly. The difference between interchange and its flat rate is Square’s markup.Ĭompanies that offer this type of pricing are not actually “true” processors. The interchange rate assigned to an individual credit card transaction varies from 0.05% to 3.17% depending on several variables such as card type, card brand, processing method, settlement time, and more.Ī processor that offers its clients flat rate credit card processing still has to pay interchange and assessments it just does so behind the scenes without its clients knowing.įor example, Square famously charged its customers a flat rate of 2.75% for swiped and 3.50% for keyed transactions that only cost it about 1.40% and 1.95% on average. Assessments remain fairly consistent across different types of transactions, but interchange rates fluctuate over about 280 different categories. Interchange fees and assessments are fixed costs that remain the same regardless of which credit card processing company a business uses. And it pays a fee to a credit card processor as a markup. It pays a fee to the card brand (Visa, Mastercard, or Discover) whose logo is on the customer’s card, called an assessment. It pays a fee to the bank that issued the customer’s card, called an interchange fee. The fundamentals of credit card processing make it virtually impossible for a processor to charge a competitive flat rate and remain profitable.Įach time a business processes a credit card transaction, it is actually paying three separate fees. ![]() Read about Subscription Flat Rate Pricing. Note that this is different than subscription flat rate pricing, where the costs of interchange are still visible to the business. Some flat rate models also include a per-transaction fee, often in the range of 10 – 30 cents per transaction. Common flat rates are currently around 2.75% – 2.9% for swiped transactions. The most prevalent version of flat rate processing is where a company charges its clients based on a fixed percentage of volume. Flat Rate Pricingįlat rate is an increasingly popular pricing model for credit card processing. If you’re considering a flat rate credit card processing company, here’s what you need to know.
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