How Interchange Plus Pricing Can Save Money

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Looking to save money on your payment processing? You’re not alone. This service is one of the most often cited headaches for small business owners, and it’s pretty common to look around for different payment processors to help lower those fees. The reality, though, is that it may not be the payment processor you’re frustrated with. Instead, it may be the pricing model itself.

Four Very Different Models

As you begin to consider different payment processing companies, you’re going to see four main models. The first is the most common – tiered pricing. It sorts your transactions into three different tiers: qualified, mid-qualified, and non-qualified. Transactions meet various requirements to fall into a given tier (processors call these ‘buckets’). For example, if the card is present and it’s processed on the same day, it might fall into the qualified category. If it’s an online transaction, it may fall into an entirely different category.

Tiered pricing simplifies things considerably, but you don’t get a chance to see what the processing company is really charging you. Subscription pricing is the second model, and in this case, you pay a membership fee as well as a per transaction fee. It can be a fairly inexpensive way to process your payments, but not very many companies are willing to offer it.

Flat fee payment processing is the third type, and it’s a bit like tiered processing, but it generally takes the three tiers and blends them to offer you a single even rate. That rate, though, can be a bit high. Interchange-plus pricing is the most transparent of these models. It breaks down every single charge you pay, both those that go to the issuing bank and those that go to the processor. This tends to make things more complicated in terms of reporting, but it usually costs less.  

The Right Online Payment Services

So, which one is right for your company? You’re going to have to think carefully about the various kinds of transactions you move through on a regular basis. You may also have to see which payment processors are competing for your business to see what’s available to you. While tiered and flat fees seem easier to deal with, interchange pass through services are typically the cheapest option. Searching terms like “what is interchange plus pricing” is likely to yield several examples that will help you put some numbers on potential transactions you might use in your store, which may help you make a solid decision.

To learn more about interchange plus pricing and have all of your payment processing concerns answered, contact us today.

Interchange Plus Pricing is Great for Profitable Businesses

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It’s time for a bit of truth. You can’t own a business now without being able to accept debit and credit cards. The average consumer often doesn’t even carry any cash, which means that you need to accept credit or debit cards in order to be able to run a profitable business.

Many business owners, however, get frustrated with this because they realize that in order to process debit or credit card payments, you need to take on an additional expense. To process credit or debit card payments you’ll have to pay a processing fee, and the amount you’ll pay depends on which company you go through to process those payments.

It’s important to not only know what there are differences between payment processing solutions, but also to determine what the best payment processors are for your business. It can also be confusing to try to figure out who gets a take of the processing fee and to understand why it’s so high. There are a many other companies that get a piece of the credit card pie, from the merchant bank to the associations (like MasterCard and Visa), and whatever company that processes the card.

One thing you should understand as a business owner is what interchange plus pricing processors are. To begin with, interchange plus pricing helps you to understand who you’re paying when you pay a fee for a credit or debit card charge. It makes the transaction much more transparent so that you know exactly what rates are being charged.

It’s also important to note that interchange plus pricing processor rates are generally much lower than flat or tiered rates. While it’s important to understand what interchange plus pricing processors are, it’s also essential to make sure that you find a company that you trust to help you to figure out the best payment processors for your unique situation and business.

At Y2Payments, we pride ourselves on helping to ensure that our customers get the right processing for their business. To learn more about how we can help, contact us today.

What are Credit Card Surcharges

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Credit card surcharges involve the addition of a small fee added to a transaction. They’re added to cover the cost of processing a credit card transaction. This is why businesses often have a minimum purchase amount if you intend to pay with a credit card. Credit card surcharges are often unfair to the consumer, and surcharge models are always unfair to businesses.

Surcharge Structures Overwhelm and Confuse

Credit card surcharges are often modeled to unfairly qualify some businesses with high processing rates and fees. This means they either have to absorb these fees or punish their customers with higher costs – which can lose customers. There are hidden fees, tiered pricing systems, and other elements that can make it confusing to understand just what your business is signing up for.

Many of these cost elements have a legitimate foundation, a reason for existing. As they become overwhelming, many are in there simply to make businesses throw their hands in the air and figure this is the best surcharge situation they’re going to be able to get.

Many Businesses Need an Alternative

You can choose a more modern alternative. Credit card surcharges subscribe to a model of end-point sales that hasn’t really caught up with today’s market of online sellers, referral services, small-cost marketplaces, or even the business-to-business economy as it’s evolved. Because of this, surcharges and fees can grow to high-risk territory for businesses that just aren’t high-risk.

If your business sells a low volume, you shouldn’t be punished so that you make even less from it. If you rely on high-cost sales, you shouldn’t have a chunk of that taken out. Neither should you have to pass costs on to customers that risks them going elsewhere. The old surcharge model has not adapted quickly enough to the way the world works today. It’s fallen behind for too many who are working too hard.

Interchange Plus Pricing

Interchange plus pricing is a more reliable and predictable model for many who fall into these categories, or who just don’t find credit card surcharging fair. You know your fees up front. There are no hidden fees or added rates. There’s no three-tier structure for punishing hard-working businesses. It’s simple, easy to implement and engage with, and it’s client-oriented.

You have options beyond simply signing up with the least damaging processor. It’s worth it to investigate what else is out there. Contact Y2Payments today at 888-693-1850 for a free no risk statement review & audit!

Why Does Swiping Lower Merchant Fees?

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Read almost any blog about lowering your credit card processing merchant fees, and you’ll quickly discover that one of the top tips is to swipe a customer’s card over keying it in. Why the simple act of swiping a card versus keying in the numbers is a mystery to some, but the explanation is fairly simple.

Risk Averse

Credit card processing companies tend to be fairly risk averse. In other words, they don’t want the merchants they work to be part of an industry that may be dangerous, they don’t want them working with customers who may not be legitimate, and they generally don’t want to associate with merchants who will cost them any extra money. Credit card fraud is at an all-time high today, and processing companies are sometimes held responsible for that fraud. As a result, they’ve developed a method of business that can only be described as awful.

The Swiping Debate

So, why does it matter if you swipe a card or key it in? Swiping is a safer method of card entry. Card numbers can be bought online in bulk. Physical cards, though, are harder to come by. Because card companies are so risk averse, they would rather have you swipe a card than key it in. If you’re swiping a physical card, the chances are far lower that you aren’t dealing with a stolen card, and because of that, they can offer lower merchant fees and rates to companies that choose to swipe over keying them in.

Other Ways to Lower Processing Costs

If you’re a company that can’t swipe a card, though, that doesn’t mean you don’t deserve low rates. instead, you simply have to choose a processor like Y2Payments that can help you get the pricing model similar to the rates government agencies — you deserve that.

To learn more about how we can help you deal with high processing costs, contact us today.

What are Interchange Fees?

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If you are a business that accepts credit card payments, there are fees you could be overlooking, and they may be costing you more than you think. They’re called interchange fees, and if you don’t understand exactly how much you’re paying each month to processors for these fees, you may not know where all of your profits are going.

A Definition
Interchange fees are essentially what a credit card sale is costing you. Any time you process a credit card sale with a customer, you’re paying a fee to do so. Take a moment to consider who is involved in a credit card sale.

First, there’s the merchant service provider – that’s your bank or financial institution. The financial institution that issues the card is the second party involved. That’s the company who actually issued the customer a card.

The last party involved is the credit card company behind the card itself like American Express or Visa. They set the interchange rate itself. For every card issued, a pre-set rate is also issued for merchant service providers to pay the bank that issues the card. That rate determines those fees that are costing you so much money.

Cards with points, airline miles, rewards, and so on have higher interchange rates. Debit cards tend to have lower interchange rates. The way you process a card also affects those rates. Swiped sales tend to have lower rates associated with them than online sales do. The important point to remember, though, is that the interchange rates set by the card company apply to every single merchant, even the smaller ones.

Lowering Your Rates
So, how can you keep those costly interchange fees in check? Work with us. With more than thirty years of payment processing experience, Y2Payments can help you save some of that money from your current statements and have it go directly to your bottom line! Contact us today to learn more.