Keeping in mind the differences between base cost and markup, the next step is to identify the pricing model that the processor is using to assess fees.
Key Terms: Qualified, Mid-Qualified, Non-qualified The easiest way to spot tiered pricing is by the terms "qualified," "mid-qualified" or "non-qualified" listed anywhere on the statement. Keep in mind that the terms may be abbreviated in several different ways such as "qual," "mqual," and "nqual." Tiered pricing is easily identified by the presence of these terms in the example statements below.
Another way of identifying tiered pricing is by rates that are repeated across different card brands. Examples of such statements are shown below.
Another form of credit card processing pricing is interchange plus, or interchange pass through. Interchange plus statements look more complicated than tiered statements, but they provide far more useful information about charges. Interchange plus statements are most easily identified by a consistent low discount rate for all card brands, or by itemized interchange charges.
Interchange plus pricing statements will show the processor's discount rate as a single low percentage for all card brands. The statements below show examples of how the processor's discount rate appears on various interchange plus statements.
Interchange plus processing statements will almost always itemize interchange detail. A few examples of interchange plus statements that itemize interchange charges are shown below.
Note:The existence of itemized interchange detail is a good indicator of interchange plus pricing, but tiered statements may also itemize interchange detail. So, don't assume that just because interchange categories are shown that a statement is interchange plus. Look also for elements of tiered pricing such as the existence of the terms "mid-" or "non-qualified", or consistent discount rates for all card brands. If any elements of these elements exist, assume the statement is based on tiered pricing.
Another pricing model that has gained in popularity is flat rate pricing, where the processor charges you one fixed flat rate that doesn't change by card type. Popular companies like Square, Stripe, PayPal, and Braintree charge on a flat rate model. It's important to note that flat rate pricing still includes interchange and assessments (the base cost) but that it conceals those costs from you. The result is that flat rate pricing is not a transparent pricing model, and makes it hard to see if you're overpaying and by how much.
Remember, the way to determine if you have a competitive processing solution is to separate the base costs and the markup. If your statement doesn't provide the details to separate those costs, it's difficult to tell how much you're paying in markup vs. non-negotiable costs.