Tiered vs. Interchange Plus Pricing

tieredinterchangeplusVisa and MasterCard issue over 400 different card types in the US, each one of these card types has a wholesale cost all the processing companies pay, this wholesale cost is called Interchange and it’s the same price regardless of how big or how small the processor may be.

Typically with a tired pricing structure we see a qualified, mid qualified and non qualified tier.  With the tired pricing structure the processor takes all of those 400 plus card types and puts them in one of these buckets or tiers.  As a merchant, you pay that tiered price regardless of the actual Interchange price the processor pays.

With an Interchange Plus pricing structure the merchant pays the exact (pass-through) wholesale Interchange cost plus one fixed mark-up.

Margins for the processors on the tiered structure are usually much larger with a tiered structure; it can be as much as 1.00% or more on many of the card types.  Interchange pass-through margins are typically much lower, often below 0.50%.

Most small and mid sized merchants in the US are familiar with the long standing standard tiered pricing structure for merchant services.  Traditionally, the Interchange Plus structure has been reserved for larger merchants (over $100k/month in processing volume).

The standard mark-up we use at Ethix is 0.25%.  This offers a very fair and competitive price for our clients with complete transparency – you know exactly how much margin we are making.  We offer the Interchange pass-through rates to all of our clients, regardless of size.

If you are on a tiered structure with your current provider we invite you to contact us to see how much you could be saving with an Interchange pass-through pricing structure with Ethix.