Credit Card Processing Options

Business owners and managers have more choices than ever before when it comes to merchant accounts and credit card processing. In response to industry competition, providers have begun to offer different pricing structures in an attempt to carve out their own niche. Going even further, some providers aren't actually merchant service providers at all. Instead, they work with your existing processor to lower rates and fees.

Most business people find the topic of credit card processing confusing enough without interjecting even more options. However, the new choices hitting the marketplace are a good thing because they're helping to lower processing costs for businesses that are diligent enough to weigh their options. This article will help you to learn about and consider the different options available.

Tiered Merchant Accounts

Tiered merchant account pricing is the traditional structure that has been the standard since the dawn of credit card processing. Tiered pricing generally operates by grouping the couple hundred or more interchange fees dictated by Visa and MasterCard into just a few rate categories. These categories are typically referred to as qualified, mid-qualified and non-qualified.

Providers have control over how interchange fees are categorized allowing them a sort of invisible control over the actual cost to the merchant. An industry professional once said to me that "tiered merchant accounts are the biggest joke going." Needless to say, tiered pricing is often the most expensive way to accept credit cards.

Interchange Plus Merchant Accounts

Interchange plus pricing is the most transparent merchant account price structure. Interchange plus accounts function by applying a standard mark-up to the actual fees dictated by Visa and MasterCard for any given transaction. Unlike tiered pricing, interchange plus ensure that the merchant is always charged the same mark-up and that the mark-up is not inflated by the provider.