trapez-finance.org >> How to Save With Credit Card Cost-Plus Pricing Plans

There are the three basic components of credit card processing costs.

Wholesale interchange cost

These funds go to the banks issuing the cards. Interchange costs typically range from 1.03 percent to over 2.65 percent.

Dues and assessments

Visa and MasterCard charge these fees to their member credit card processors. Typical rates are 0.0925 percent for Visa and 0.095 percent for MasterCard.

Mark up

This is what the credit card processor and ISO charges retailers over and above the interchange cost and the dues and assessments fees. This fee covers the processing of the payments made by shoppers.

When negotiating a good deal on a merchant account, you can’t do much about the interchange costs and dues and assessments. They are pretty much constant.

What you can look for is a good deal on the mark up, or what your merchant service provider charges you for processing customer payments.

Under the traditional tiered pricing system, all of the interchange categories are jammed into one of a limited number of pricing levels.

These levels distinguish card-present transactions (usually with the best rates), corporate cards, debit cards, etc. With perceived increased risk in card usage, rates also increase.

In contrast, the cost-plus system marks up the actual interchange rate by a given amount for each transaction. The mark up typically ranges from 0.15 percent to 0.75 percent.

How much can this save?

“The shift from tiered to cost-plus pricing is reducing the cost of accepting credit cards for many merchants overall from 15 percent to 35 percent,” according to Bill Hearon, president of Effective Payment Management

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