Comparing rate quotes from one merchant services processor to another can be challenging. There are after all over 1000 different rates and fees categories!
The wholesale interchange rates vary based on whether the card is swiped, keyed in, or accepted from an eCommerce site. The rates also vary depending on the industry accepting the card payment. They also vary depending on whether the card is a debit card, credit card, rewards card, or corporate card.
Many merchants, especially those getting started with payment processing, choose what sounds the simplest to them, a flat rate and transaction fee. Typically the flat rate is quoted at around 3%. Transaction fees and a monthly fee are added to the flat rate.
Merchant services providers quoting a flat rate have to be sure they are profitable. For example, if a merchant took all corporate and business cards, 3% might not be profitable, because those types of cards have the highest risk and therefore the highest wholesale interchange rate. If the merchant takes all debit cards, which are the least risk and have the lowest wholesale interchange rates, then the processor will make huge profits.
Looking at this from the side of the merchant, it behooves a business to understand what types of cards they will be likely receiving for payments. A fast-food restaurant will likely take mostly debit cards. An industrial supplier will be taking a large number of corporate purchasing cards. In the case of the fast-food restaurant, a flat fee of 3% and $.20 would be very expensive.
Other types of pricing besides flat rate pricing are Tiered Pricing and Cost + Pricing explained in one of our previous blogs.
Call Electronic Money Company at 505-362-0837 to do a comparison for you before you get stuck in a contract with higher rates than you thought. Or send a request for a comparison through our Contact Us page.