Clik here to view.
Author : Lisa Kaye
The biggest challenge a merchant can face while opting for a merchant account is the pricing structure to choose. There are four major and widely used pricing structures and each one has its own pros and cons. One might be better than others for a certain process and vice versa. However, one thing worth mentioning is that in most common structures such as the tiered structure and Interchange plus, the amount you pay for a credit card processing increases with the volume. That is where the flat rate pricing takes the lead, as it is the only credit card processing pricing model which is not volume based.
Although the Interchange Plus pricing model is considered a great model, it is also volume based which means you will have to pay more for larger merchant processing transactions. In contrast to other models, Flat rate pricing is more transparent and offers more accountability to the merchants. In this merchant account pricing structure the true interchange costs are passed directly through to the merchants.
The biggest difference between a flat rate pricing and other pricing structure is that there is simply no mark up on the interchange. This sounds quite strange as we know that ‘interchange fee’ is what the acquiring bank needs to pay the issuing bank. In case of flat rate pricing, a merchant service provider makes money by charging a fixed amount of monthly fee. Now, this pretty much explains the term ‘flat’.
Because of these differences, flat fixed rate pricing structures are the least expensive and transparent merchant solutions today. However, it is gaining great popularity but not all providers might be offering a pricing that is flat in true sense. It is extremely important that you do your homework and carry out a comprehensive comparison before taking the final decision.
