Choosing the right pricing model is your only chance to do better for your business. When it comes to credit card processing, interchange fees may be non-negotiable, but choosing the right pricing model is in your control. Understand your options, and the pros and cons of each, with this presentation from Swipely.

1. THE PROS & CONS OF PRICING MODELS
HOW ARE YOU
BEING CHARGED
FOR CREDIT CARD
PROCESSING?

2. Credit Card Pricing Models: Pros and ConsCredit Card Pricing Models: Pros and Cons
THERE’S A LOT OF DIFFERENT KIND OF CREDIT
CARD PROCESSING MODELS.
As a business owner you want to accept a wide variety of cards from your customers while
paying the lowest possible rates for each card type.
However since interchange fees are non-negotiable your hands are a little tied. This means
you’ve got to choose the right pricing model to ensure you aren’t paying a ton of additional
charges that don’t add any value to your business.
Choosing the right pricing model is your only chance to do better for your
business in this regard and will have a major impact on your bottom line

3. ENHANCED RECOVER REDUCED (ERR)
Pricing structure where the merchant pays one set rate for qualified
cards, and then is billed back the difference for non-qualified cards
(such as rewards cards) each month.
Simplicity - there is only one rate displayed
Best fit for merchants with low transaction volume
- Often, won’t know effective rate until you know
the target margin and actual interchange rate
- Many often cite they receive a lower quoted rate
and then get a higher rate once they sign on
- Known as the most opaque credit card
processing fee structure in the industry
+ Simplicity - only one rate displayed
+ Best fit for merchants with low
transaction volume
Credit Card Pricing Models: Pros and ConsCredit Card Pricing Models: Pros and Cons

4. + You pay the exact interchange fee, plus a fixed
processing fee set when you sign up
+ If Card Associations change or reduce the fees,
you get the savings
+ Payment acceptance fees are explained to you
in a way that you can understand
+ No hidden fees
+ Used by all 100 top largest U.S. retailert.
INTERCHANGE PLUS
A 100% transparent pricing structure based on the interchange tables published by Visa
and Mastercard plus percentage and authorization fees. In this model interchange fees are
passed directly through to the merchant with a markup (that’s the “plus).
- Not Many
- While Interchange Plus is the most transparent
you always want to be sure that the rates you
negotiate fit your business needs and
processing volume… more on the later
Credit Card Pricing Models: Pros and ConsCredit Card Pricing Models: Pros and Cons

5. TIERED PRICING
When merchant account providers designate pricing by “tiers” - based on a set of qualifying criteria - and price
transactions accordingly. For example, in the 3-tiered pricing system, the first tier (lowest cost to the merchant) is a
standard transaction or swipe of a qualified card, the second tier might be a higher-cost rewards card, and so on.
Simplicity - there is only one rate displayed
Best fit for merchants with low transaction volume
- Beware of a “teaser tier” scheme. It promises
low rates for a small number of cards
- Merchants often find it difficult to navigate
these contracts and subsequent statements; for
example, how many transactions will be priced
at each tier? It’s hard to know
+ Hard-coded rates make it easy for the
merchant to understand what they are paying
for each tier
+ Often the “cheapest” method up front.
+ Makes it easier for merchants to reconcile fees
at the end of the month
Credit Card Pricing Models: Pros and Cons

6. + –