Optimizing Your Merchant Credit Card Processing Rates
As a business owner, you know that accepting credit cards is essential for staying competitive. However, navigating the complex world of credit card processing rates can be challenging. At Infinity Data, we specialize in helping merchants like you optimize your rates to save money on every transaction.
Understanding Credit Card Processing Rate Structures
There are three main types of credit card processing rate structures:
- Tiered pricing: With this structure, transactions are categorized into tiers (e.g., qualified, mid-qualified, non-qualified) based on factors like card type and processing method. Each tier has a different rate, with qualified transactions having the lowest fees. While simple, tiered rates can be more expensive overall.
- Interchange-plus pricing: This structure is more transparent, as it separates the interchange fees (set by card brands) from the processor's markup. You pay the interchange fee plus a fixed markup on each transaction. This can result in lower overall costs, especially for businesses with high volumes of transactions.
- Flat-rate pricing: With flat-rate pricing, you pay a fixed percentage for all transactions, regardless of the card type or interchange fees. While easy to understand, flat-rate pricing can be more expensive for businesses with a high volume of debit card transactions or low average transaction amounts.
Additional Cost-Saving Strategies
In addition to choosing the right rate structure, there are other ways to optimize your credit card processing costs:
- Cash Discounting: Encourage customers to pay with cash by offering a discount. This can help offset credit card processing fees.
- Surcharging: In some states, businesses can pass on credit card processing fees to customers who choose to pay with credit cards. This can help recover costs but may discourage some customers from using credit cards.