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Flat Rate Pricing And Various Aspects Related To It

Flat Rate

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Flat Rate Pricing is playing a critical role nowadays. Technology is advancing rapidly and so is the ecosystem of payment. Standing in the 21st century, we can easily see that people are giving more preference to online transactions. Moreover, if we consider the present situation where maintaining social distance is very important, physical transaction or offline transaction is almost dead. Moreover, online transaction provides endless offers and flexibilities to the customers.

So, if you are someone who wants to take your business online. You must become a merchant of any merchant processor in order to accept credit card payments online. Now, when it comes to accepting card payments online, you need to know certain things such as interchange rate, flat rate and many more.

Credit card transaction is a real-time process and there are certain agencies such as credit card issuing banks, credit card processors and credit card networks work behind this to complete the transaction. When it comes to online transactions, the payment processor offers a complex structure. It becomes quite difficult to understand the complex payment structure for the new merchants. Moreover, there are many merchants who find difficulties to understand the interchange rate and interchange plus rate. Therefore, the payment processor asks the merchants to go for flat-rate pricing. Flat rate pricing is completely a simplified payment structure. Go through the following points to know more about it:

Flat Rate Pricing

Interchange fee is quite complicated as there are several factors that determine the rate. These are the type of business, the mode of transaction and the type of credit card being used for the credit card transactions. There will be a different interchange rate for different credit cards. The payment processor does not know what type of credit card will be used for making the online purchase and therefore, they set a fixed pricing structure for the credit card processing fee. This is called flat rate pricing.

Generally, the flat rate price is quite higher than the normal interchange plus rate. If the merchants do not set it on the higher side, it will be difficult for them to cover the entire cost of the transactions that will be processed. For example, if we talk about high-end rewards credit cards, the interchange rate is quite higher than the others. Therefore, it costs more to process for a merchant processor. So, the payment processor sets a suitable flat rate pricing that will be helpful to cover the costlier transactions.

Flat Rate Pricing Might Cost You More

Everything has positive as well as negative aspects and flat rate pricing structure is not an exception. If you are finding difficulties to understand the complicated interchange-plus pricing structure, you should go for flat rate pricing. It will simplify the entire pricing structure and no matter what credit card you are accepting, you will be charged a specific amount.

If we talk about the interchange rate, it can be anywhere between 1% and 2%. We at International Payment Solutions charge 0.25% on top of the interchange rate. Well, the rate will be decreased if the business processes a high amount of transactions every day. But, on the other side, if you choose flat rate pricing, the merchant processor can charge 1.4% on top of the interchange fee.

Is It Suitable For You?

Well, the online payment industry is well-known for its complicated pricing structure. Therefore, many businessmen stick to their traditional business strategies. But, considering the present situation where COVID-19 is flattening the growth of retail businesses, online businesses are getting the taste of success. Therefore, it will be better if small businessmen take their business online. So, when it comes to online business, you have to pair your business with any merchant processor solutions in order to receive payment online. Now, if you have a small outlet where the online transaction volume for each day is under $15.00, you can go with a flat rate pricing structure.

Well, your business will definitely grow over time and in such a situation. You have to process a high volume of online credit card transactions. So, initially flat rate pricing is suitable for you. But, as your online business grows, you should consult with your payment processor in order to understand the rate comparison. It will help you to get the best deal for your business.

Not An IPS Merchant?

Well, if you are new to online business, you will probably think that flat rate pricing is the best option you have. It is a fact that the online pricing structure is quite complex but, it does not mean that it is difficult to understand. At one point in the future, you have to understand it in order to continue your online business effectively. We at International Payment Solutions provide all sorts of help and guidance to our customers. If you choose International Payment Solutions otherwise known as IPS as your merchant processor, you will definitely get fruitful outcomes.


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