![]() Middleman paypal plus#A coffee shop with $5 average transactions, for example, could be quoted well over Square’s 2.75% no matter how many interchange plus processors they check with. The first is businesses that would legitimately pay less if they sign up with a flat rate company. There are two sources for this misconception. So, when a transaction costs them less to process, they make more money instead of passing the savings to you. On flat rate, the processor continues to charge their one flat rate. On interchange plus pricing, you’d see lower costs when the transaction costs are lower, because the processor passes along the lower interchange costs. The difference between the interchange costs and the rate you pay is the amount the processor makes. On interchange plus, the processor passes along the wholesale interchange costs to you and then charges a separate markup. On flat rate pricing, the processor charges you one rate no matter how much the transaction costs at wholesale. In turn, the company charges you to cover their costs of interchange plus a markup for their profit. No matter which processor you choose, that company pays interchange fees to process cards. The reason is that flat rate pricing is typically much higher than the “wholesale” cost to process your transactions. Otherwise, competitive interchange plus pricing will be lower cost. In the case of Square, for example, it will be your lowest cost option if your average transaction is under $10 OR if you only accept a few thousand dollars per month in credit cards. The truth is, flat rate pricing can be the cheapest, but only for businesses that fit very specific criteria. You may see it as 2.75% (in the case of Square’s swiped transactions) or 2.9% + 30 cents (in the case of Stripe’s online transactions.) Companies like Square, Stripe, and PayPal offer flat rate pricing. Instead of various interchange rates, you’ll just see one rate. Misconception 1: Flat Rate Pricing is the Cheapestįlat rate pricing, where a processor offers you a fixed rate for transactions, looks simple. You Can’t Get Lower Pricing Unless You’re a Big Business.You’ll Get the Best Pricing by Cutting Out “Middlemen”.Interchange Plus Pricing Protects You from Being Ripped Off.In this article, we’ll clear up these credit card processing misconceptions to help you avoid common pitfalls and misleading sales spin. There are several common misconceptions in credit card processing and sales reps can use those to trick you into overpaying. ![]()
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