Standing in the 21st century, it is very important to understand the ecosystem of online payment processing. As we all know that COVID-19 is flattening the growth of many retail businesses. Small businessmen are trying their best to cope up with the present situation. We at International Payment Solutions also understand their concern and therefore, we have already introduced all of our advanced payment solutions. Customers are giving more preference to online payment and therefore, businessmen have to adopt new online payment strategies. However, when it comes to online payment processing, we must talk about the various pricing structures inextricably related to it.
If you are new to online business, you might have difficulties to understand the complicated online payment processing price structures. However, before getting into the pricing structures, one must know that accepting card payments is a real-time process. Merchant processor, credit card issuing bank and credit card network work behind this real-time process. In order to accept credit cards, one must have a merchant account under any payment processor. The payment processor takes a specific charge for each credit card transaction. And this is where a merchant becomes familiar with various pricing structures retaliated to online payment processing.
We at International Payment Solutions offer the interchange-plus pricing to all our merchants. We firmly believe that all our merchants should understand the pricing structure. It is one of the best ways to avoid overpayment. Therefore, considering this point in mind, we have elaborated on various pricing structures related to online payment processing. So, have a look at the following points:
Interchange Plus Pricing: Interchange plus pricing is one of the most affordable and honest pricing structure in the online payment industry. Although interchange plus pricing is quite complicated, it creates a transparent relationship between the merchant processor and the merchant. In such a case, the merchant processor solution takes a certain amount of charge on top of the interchange-plus rate for each credit card transaction that customers make at the outlet through payment terminals. Now, the interchange plus pricing depends upon the type of credit card merchant is accepting. If the merchant is accepting a high-reward credit card, the cost of the credit card processing fee goes on the higher side. In such a scenario, the interchange rate can be a little higher and so is the interchange-plus pricing. But, in the case of normal consumer credit card transactions. The overall interchange rate stays on the lower side and so is the interchange-plus pricing. Well, this is something that most businessmen do not understand and they go for flat rate pricing that actually costs higher than interchange-plus pricing.
Flat Rate Pricing: If your merchant processor is offering a flat-rate pricing structure. It means that the processor has already taken the card band fee, margin fee and interchange fee. In the case of flat-rate pricing, the payment processor offers a specific rate that they will charge on each credit card transaction. It does not matter what card is being accepted by the merchant, there will be no change in the flat rate pricing structure. As the business grows, the business will start accepting more credit card payments. In such a situation, the businessman has to pay more credit card processing fees in the form of a flat-rate pricing structure. Therefore, we will say that if you want to survive in this competitive online market, you must understand the complicated online pricing structure. Flat rate pricing can be good at the initial stage. But, later when your business will be established, you have to reconsider the pricing structure. You can consult with your payment processor and ask them about the present credit card processing fees for different pricing structures. It will help you to understand the market and you can easily elevate your online business to the next level.
Tiered Pricing: Tiered pricing is one of the most commonly used pricing methods in the United States. Tiered pricing consists of two different types of pricing structure- one is a lower qualified rate and it is applicable for a certain type of credit card transaction. Another one is mid and non-qualified rate that is applicable for other credit card transactions. If you as a merchant is going for a tiered pricing structure, you must have a good knowledge about different types of credit cards. You must know which cards are qualified for lower rates and what are the cards that your business mostly accepts. Well, there is another pricing structure that is known as differential pricing. Canadian merchant processors mostly use it. Here, merchants need to pay interchange differential fee along with the qualified rate.
Not An IPS Merchant?
By now, you have probably understood different types of pricing structures. Now if you want to accept online credit and debit cards. You must pair your business with International Payment Solutions that is one of the reputable merchant processor solutions. So, what are you waiting for? Get in touch with IPS today.