Credit Card Merchant Services

Merchant services offer clients various components of payment needed for accepting cashless modes of payments. They may provide check support, POS infrastructure, and merchant accounts for offline payments. They also offer internet merchant accounts, online payment processing, and chargeback support.

Credit card merchant services facilitate your payments for the purchases done online. After using your credit card to make payments, your merchant bank receives your details. The credit card network then authorizes it to proceed with the transaction.

The payment is sent to your merchant account, and the same amount is deducted from your credit card. However, it would help if you considered the types of credit card merchant fees offered by your merchant bank. The most common pricing models include:

Flat rate

This happens when you are charged a flat rate in every transaction. For example, you might be charged 2.9% plus an additional 30 cents per swipe on your credit card. Deciphering your effective rate is easier when using this plan. The plan is best if you are processing few small credit card transactions monthly.

However, if you are transacting over $8000 credit card payments monthly, you might be paying more than when using a tiered option. Considering 2.9% plus 30 cents as the swiping rate and $5 as the average transaction, by transacting $100,000 annually you will actually be charged a flat rate of $8,900 rendering your effective rate to be 8.9%.

$100,000 x 2.9% = $2,900 (annual credit card revenue)

$100,000 / $5 = 20,000 (number of transactions)

20,000 x 0.30 = $6,000 (credit card swiping fees)

$2,900 + $6,000 = $8,900 (total annual amount)

Tiered Pricing

The model is ideal when processing over $8,000 monthly. It saves money than the flat-rate plan making it the most commonly used form of pricing option. It rates are broken down into three levels, namely:

  1. Qualified; Deemed the safest and has the lowest rate. You get this rate if you have your card in hand and swipe it. You can also get the rate if your credit card is not a rewards credit card. Rewards credit cards are expensive
  2. Mid-qualified; The rate is expensive than the Qualified rate but cheaper than the Non-qualified rate. It happens when in a web payment whereby you type your credit card number
  3. Non-qualified; This is the most expensive level, and it has costly and risky transactions. Some of these transactions are which are unacceptable in person or from credit cards offering rewards.

Interchange Pricing

The model consists of the interchange fee, which is determined by card networks, and a small markup fee charged by the credit card processor. It is much transparent since you are charged for your actual transaction. However, its working varies with types of credit cards used, which may complicate statements.


The best credit card your business type determines merchant plan. If you just started your business, you might be having fewer credit card transactions, and a flat rate is likely to be ideal. As the business grows and you start processing over $8,000, you may opt for the tiered plan. The Interchange plan may save some money for you if you are dealing with complicated statements.