Is Interchange Plus Pricing the Lowest Cost for Credit Card Processing

In most cases, the lowest cost for credit card processing is interchange plus pricing. Even when the cost of interchange plus is the same or higher than a qualified tiered rate for credit or debit, usually the higher mark-up on mid and non qualified tiers vs the fixed mark up over interchange in interchange plus will result in an overall lower processing cost. This is because there is often a higher margin built into the mid and non qualified tiers, and also because qualified transactions can be a relatively smaller percentage of the total transactions: 20-30% qualified vs 70-80% mid and non qualified.

In general, higher numbers of transactions and higher sales volume over a wider mix of card brands and types will result in lower costs for interchange plus vs tiered pricing.

Merchants with extremely small numbers of transactions and small sales volume, for example less than $1,000 per month, may actually obtain lower processing costs with tiered pricing vs interchange plus pricing because the smaller number of sales limits their exposure to different card brands and card types and thus limits their exposure to mid and non qualified rates.

Other factors such as batch fees, monthly service fees, and monthly minimums must also be taken into account when comparing interchange plus to tiered pricing. Since these fixed costs have a higher impact on small volume merchants, if the corresponding fees in a tiered program are lower than in a competing interchange plus program, then the tiered program may very well be more cost effective.

Burlington Bank Card strives to provide our merchants with secure and reliable payment processing, transparent pricing, and one-on-one personal service.

Please call 1-800-758-1002 or contact us to learn more about Interchange Plus Credit Card Processing and Merchant Accounts.