First, just because a payment processor says they will get you 1.54% rates does not mean that is what you will pay. It’s unfortunate but true. Keep in mind, it is possible that there is a credit card type using a particular payment method that will give you that rate, but 99% of your transactions will not have that rate. This is what we call “hidden fees”. The way around being tricked here is by either getting flat free pricing or interchange plus pricing which we’ll talk more about below. See also the pricing FAQ for more on the different payment processing pricing models.
To get down to it, here are the fast and easy ways to get the best pricing in payment processing:
- Get an actual merchant account if you plan on growing your business to more than $50k per year. A merchant account builds a credit history for your business and gives you more pricing options as you grow. You will have more negotiating power and therefore more ability to get better rates.
- Avoid tiered pricing. Whenever you hear the terms MDR (merchant discount rate) and non-qual (non-qualified) fees, stay away. That is tiered pricing and there are likely hidden fees. When you hear amazing rates like 1.54%, that is also likely tiered pricing, or at least it is a payment processor that is not fully transparent.
- Go to a payment processor that uses interchange plus pricing. Interchange plus pricing, also known as cost plus pricing, clearly shows the markup that payment processors have. So, it is much more difficult to have hidden fees. Simply ask them if you have interchange plus pricing. This is the key reason TCM only uses interchange plus pricing.
- Go for flat fee pricing if you process less than $50,000 per year. Generally, interchange plus pricing merchant accounts have a monthly fee, like $10 or $20 per month. But this is relatively small if you are processing a lot. In the end, you will save by moving to a full merchant account. But if you are processing less than $50k per year, the monthly fees are a relatively large amount. Your business size matters in this respect.
At TCM, our mission is to drive down the price of accepting payments for merchants. You’ll always get transparent and fair pricing. We also think you will not be able to find a payment processor with lower pricing. According to the Small Business Administrations, 82% of businesses fail because of cash flow problems. Our model helps improve the odds for you. We increase your cash flow with lower rates and we deposit funds faster, either next day or same day.
