Let's explore three common payment processing pricing Models:

Remember that the best choice depends on your specific business needs, volume, and preferences. Evaluate these options based on your requirements to find the most suitable payment processing solution!

Interchange-Plus Pricing:

Advantages: Transparent pricing. Merchants can quickly identify interchange costs versus processor markup, making it easier to compare and contrast among different providers. The transparency of interchange-plus pricing often results in lower costs for merchants.
Disadvantages: Highly detailed statements that can be difficult for businesses to read and understand. Interchange-plus pricing clearly spells out the fees associated with processing payments, and some merchants might find this high level of detail difficult to digest

Flat-Rate Pricing:

Advantages: Simplicity and predictability. Flat-rate pricing models are simple to understand, and merchants can easily predict the monthly costs of payment processing. Flat-rate pricing also produces easy-to-read monthly statements.
Disadvantages: Higher likelihood of overpaying for processing. Interchange rates can vary widely, from high fees on rewards cards to lower fees for debit cards. However, the flat rate does not vary, and therefore cost savings on lower interchange rates will not be realized

Tiered Pricing:

Advantages: Establishes three rate categories for payments – qualified, mid-qualified, and non-qualified. Qualified transactions have the lowest rate, and that rate will rise as transactions are downgraded to mid-qualified or non-qualified. Downgrades can occur for various reasons, including how physical cards are processed (dipped, swiped, or keyed-in) or when payments are made without the physical card being present (e-commerce, phone orders, etc.
Disadvantages: Complexity and potential for higher costs. Tiered pricing can be more challenging to understand, and merchants may end up paying more if their transactions frequently fall into higher-rate categories

Surcharging vs Cash Discount Program

Surcharging:

A surcharge is an additional fee that a customer pays on top of the listed price when using a credit card.
With surcharging, the merchant adds a percentage fee to the transaction when the shopper chooses to pay via credit card.
For example, if a customer purchases a $10 product and the merchant has a 3.5% surcharge, the total amount charged would be $10.351.

Cash Discount Program:

In a cash discount program, all prices in the store are marked up to credit card prices. This means that the fees are already baked into the product prices.
However, if a customer chooses to pay using cash, a discount is given at the point of sale.
For instance, if the same $10 product is priced at $10.35 (credit card price), a customer paying with cash would receive a discount of $0.35, resulting in a final payment of $10.

Key Distinction:

Surcharging: You add a fee to the listed price.
Cash Discount: You subtract from the listed price for cash payments.

Remember that the choice between these programs depends on your target audience and business preferences. Consider calculating your effective rate and evaluating your debit card processing volume to determine the best fit for your business!

Siglos Payment Group

Let's explore three common payment processing pricing Models:

Interchange-Plus Pricing:

Flat-Rate Pricing:

Tiered Pricing:

Surcharging vs Cash Discount Program

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