If you are a retail business owner, you know that accepting credit and debit cards is essential to your success. But what you might not know is that the type of merchant account you choose can have a big impact on your bottom line.
Retail merchant accounts come with several different pricing structures, and each one has its own advantages and disadvantages. In this guide, we’ll take a look at the most common types of retail merchant accounts and help you choose the right one for your business.
Interchange-plus pricing: Interchange-plus pricing is the most transparent and fair pricing structure for merchants. With interchange-plus pricing, you’ll pay a small markup on top of the interchange rate (the wholesale cost of processing a credit or debit card transaction). This markup is generally a percentage of the transaction plus a small per-transaction fee.
The advantage of interchange-plus pricing is that you know exactly how much you’re paying for each transaction, so there are no surprises. The downside is that it can be slightly more expensive than some of the other pricing structures.
Tiered pricing: Tiered pricing is the most common type of retail merchant account pricing. With tiered pricing, your processor will group credit and debit card transactions into different tiers, with each tier having its own fixed rate.
The advantage of tiered pricing is that it’s simple to understand and easy to budget for. The downside is that it’s not as transparent as interchange-plus pricing, so you may end up paying more than you need to. In addition, tiered pricing often comes with additional fees, such as monthly statement fees and minimum monthly processing fees.
Flat-rate pricing: Flat-rate pricing is similar to tiered pricing, but instead of having different rates for different transaction types, you’ll pay one flat rate for all credit and debit card transactions.
The advantage of flat-rate pricing is that it’s even simpler than tiered pricing – you’ll know exactly how much you’re paying per transaction. The downside is that it’s not as transparent as interchange-plus pricing, so you may still end up paying more than you need to. In addition, flat-rate pricing often comes with additional fees, such as monthly statement fees and minimum monthly processing fees.
Pay-as-you-go pricing: Pay-as-you-go pricing is becoming more common as businesses move away from traditional merchant accounts. With a pay-as-you-go account, you’ll only be charged for the transactions you process. There are no monthly fees or minimum processing requirements.
The advantage of pay-as-you-go pricing is that it’s very flexible and can save you money if you don’t process many credit and debit card transactions. The downside is that it can be more expensive if you do process a lot of transactions, and it’s not always available for businesses in certain industries.
Now that you know the different types of retail merchant account pricing, you can start shopping around for the right account for your business. When you’re comparing accounts, be sure to pay attention to the fees and terms of each account. And don’t be afraid to negotiate – many processors are willing to work with you on pricing if you’re a good customer.
The bottom line is that the right retail merchant account can save you money and help your business run more smoothly. So take your time, do your research, and choose the account that’s right for you.