1. Interchange Plus Pricing
In this transparent model, merchants pay the actual interchange fee set by credit card networks (e.g., Visa, Mastercard) plus a fixed markup from the payment processor. This approach allows businesses to see the exact cost breakdown of each transaction. Interchange fees vary based on factors like card type and transaction method. For instance, the average credit card interchange fees range from 1.15% to 3.25%.
2. Fixed Pricing
Also known as flat-rate pricing, this model charges a consistent percentage for all transactions, regardless of card type or transaction method. For example, a processor might charge 2.9% plus $0.30 per transaction. This simplicity makes it easier for businesses to predict processing costs, though it may not always be the most cost-effective option.
3. Surcharging
Surcharging involves adding a fee to transactions where customers pay with credit cards, offsetting processing costs. While this can reduce expenses for the merchant, it’s essential to comply with legal regulations and card network rules, as surcharging is not permitted in all jurisdictions.
4. Dual Pricing
In a dual pricing model, businesses display two prices: a lower cash price and a higher card price. This approach encourages cash payments by offering a discount, while still covering processing fees for card transactions. It’s important to ensure that this pricing strategy complies with local laws and card network regulations.
