Program Choices:

No matter if you are just starting out or have been in business for awhile and no matter if you are a single location or a national chain or anything in between - understanding and staying on top of your merchant service program gives you powerful knowledge to negotiate your merchant service fees and put more money to your bottom line!

The first choice is whether to use traditional merchant service programs or the new cash discount program.  Both options are explained in the next 2 pages.  

Traditional Merchant Services 

The 4 most common traditional programs are :

1.  Interchange Pass-Thru Program - This is the best program for 95% of the all businesses!  This program passes thru the Assessment fees and the Interchange fees and then the Processor/ISO adds a markup on top.  A true Pass-Thru program has:

• Has the only transparent statement that shows the mix and cost of all card taken.
• Shows the breakdown of the Markup, Assessments and Interchange fees.
• Guarantees* to never pad or markup the Assessment  or Interchange fees.
• Guarantees* to never raise the Processor/ISO markup.

2.  Tiered or Bucket Program - This program is the most confusing and expensive program for businesses to be on.  Usually the tiered/bucket program has 3 tiers, Qualified, Mid-Qualified and Non-Qualified.  A Tiered program has:

• Each transaction falls into one of the tiers based on the Processors criteria.  
• This program is not transparent and hides the actual cost of each card.  
• Each tier has its own rate.
• Processor determines which transaction goes into what tier.
• Program usually has additional fees called "Downgrades" when a transaction falls outside the criteria.
• Tiered pricing programs vary by processor.

3.  Flat Rate Program - The Flat Rate program is recommended for less than 5% of the businesses.  Works the best for businesses that have high transaction counts with low volume, like a coffee shop.  Also, works good for a business that is just starting out or does less than $3,000.00 a month in credit/debit card sales.  The Flat Rate program has:

• No transparency.  Hides the actual costs of the cards.
• Huge profit on Debit cards.
• Usually capped on per transaction volume.

4.  Flat Rate Subscription Program - A monthly subscription membership is paid on top of the Interchange fees and Payment Network Pass-Through Fees.  This program usually has a per transaction fee also and can vary whether the payment was face to face or ecommerce or phone order.  Merchants most be careful of hidden fees and if all fees are transparent like the interchange.

The Bottom Line:

On traditional merchant services, the bottom line is that no one is going to do it for free or lose money!  Their is "no too good to be true" program out there.  Understanding how it works and what program is best for the business is a very powerful first step to reducing fees and putting more money to the bottom line!  Again, 95% of the time Interchange Pass-Through is the best program to use!