Low-Cost Merchant Services: what comes with your meal?
You wouldn’t want to be sold a cake just to find out later that you need to pay for the napkins, utensils, and plates that should come with it. Many card processors like to advertise one low rate that appears to be the approximate amount you will be charged for each transaction but actually tack on additional costs later. When shopping for a new processor, you should keep in mind all of the fees or surcharges that get added. Don’t compare companies solely by advertised price because you may just skip over one that appears pricey, but is actually just transparent in its advertised expenses. It is no surprise that true low-cost merchant services are provided by honest card processors who will have no hesitation giving you everything in writing.
There’s no such thing as a free lunch
The age-old saying is true; if you want something, you’ll have to pay for it. Would you like to discover how card processors are making their profit? The hunt for low-cost merchant services begins with understanding. Using two of the most popular pricing models, cost-plus and tiered pricing, processing companies structure your pricing plan.
Tiered Pricing:
This plan offers three types of charges bases on your business; Qualified, mid-qualified, and unqualified. The former is the least expensive, and the latter is the costliest. Each tier has dozens of its own types of card transactions, i.e. debit, card not present, or rewards card. Your processor will charge you a set rate based on your qualification status but is making more profit based on how inexpensive the card transaction is.
For example, a pie shop may offer dozens of types of pies, and peach pie may cost them a different amount to make. The pie shop sells the pies for $5, $10, or $15. So if the pie shop has a cost of $1 for Apple Pie slice and a cost of $4 for Blueberry Pie slice (which both sell for $5), then the pie shop will make a variable profit (either $4 or $1) depending on the flavor of the pie that the customer chooses. This is the same way in which processors make their profit on tiered pricing.
Cost-Plus Pricing:
This is a much simpler (and usually inexpensive) pricing model. No matter the cost of a transaction or your business qualification, a card processing company with this model charges you a set percentage of the transaction size above their cost. The consistent markup guarantees you’re paying the same low markup no matter what card is being used at your business. In other words, it makes sure your not paying $5 for a slice of pie that only costs $1.
Hungry for Savings?
We offer low-cost merchant services plans that are easy to understand, honest, and affordable. Our PRICING PAGE will explain our no-additional fees and wholesome-cost prices, plus some additional benefits!
