How does interchange plus compare to other pricing models?

At this point, you already know we offer interchange plus pricing at Helcim. But have you ever wondered why we chose this model over others like flat-rate or tiered pricing?

This article breaks down the common pricing models and explains the advantages of interchange plus, giving you confidence in your choice of Helcim as your payment processor.

In this article

• Video

• What is flat rate pricing?

• What is tiered pricing?

• Why we chose interchange plus

• Comparing costs: interchange plus vs. flat rate

• Conclusions

• Next steps

• FAQ & Troubleshooting

Video

What is flat-rate pricing?

Flat-rate pricing offers a single, fixed rate for all transactions, regardless of the card type or transaction method.

Example

A flat-rate processor might charge 2.9% + 30¢ per transaction. Whether it's a standard or a premium rewards credit card, you'll pay the same rate.

What is tiered pricing?

Tiered pricing categorizes transactions into different tiers (e.g., qualified, mid-qualified, non-qualified) based on factors like card type and transaction method.

Each tier has a different rate, with qualified transactions having the lowest rates and non-qualified transactions having the highest.

Example

• Qualified: 1.9% + 10¢

• Mid-qualified: 2.5% + 20¢

• Non-qualified: 3.5% + 30¢

While tiered pricing can offer lower rates for some transactions, it can also be confusing and unpredictable, as it's not always clear which tier a transaction will fall into.

Why we chose interchange plus

At Helcim, affordability and transparency are important to us. An interchange plus model helps us provide both these things and more.

• Transparency: Interchange-plus provides a clear breakdown of your processing costs, separating interchange and assessment fees from our markup. You see exactly what you're paying for and why (all our rates can be found here)

• Cost-Effectiveness: Interchange-plus can be more cost-effective than other models, especially for businesses with high volumes or diverse card mixes. You benefit from the true interchange rates, which can be lower than the bundled rates in other models.

• Greater Control: With interchange-plus, you have greater control over your processing costs. You can identify opportunities to optimize your processing, such as encouraging certain card types or minimizing keyed-in transactions.

Comparing costs: interchange plus vs. flat rate

Let's see how the costs compare between interchange-plus and flat-rate pricing using a hypothetical scenario.

Flat-Rate Pricing

Let's say your flat-rate processor charges 2.9% + 30¢ per transaction. Your total fees would be:

• $10,000 x 2.9% = $290

• $10,000 / $100 (average transaction) = 100 transactions x 30¢ = $30

Total fees: $290 + $30 = $320

Interchange-Plus Pricing

With interchange-plus, your costs will vary depending on the specific interchange and assessment fees for each transaction. Let's assume an average effective interchange rate of 1.5% + 10¢, an average assessment fee of 0.10% + 2¢, and a processor markup of 0.40% + 8¢. Your total fees would be:

• $10,000 x 1.5% = $150

• $10,000 / $100 (average transaction) = 100 transactions x 10¢ = $10

• $10,000 x 0.10% = $10

• $10,000 / $100 (average transaction) = 100 transactions x 2¢ = $2

• $10,000 x 0.40% = $40

• $10,000 / $100 (average transaction) = 100 transactions x 8¢ = $8

Total fees: $150 + $10 + $10 + $2 + $40 + $8 = $220

In this scenario, interchange plus pricing would save you $100 a month, compared to flat-rate pricing. This adds up to $1200 a year!

Conclusions

Here’s a point-form review of what we learned in this article.

• Flat-rate pricing offers simplicity but can lead to overpaying for certain transactions.

• Tiered pricing categorizes transactions into tiers, but it’s not always clear which tier a transaction falls into

• Interchange-plus pricing offers transparency, cost-effectiveness, and greater control, which is why Helcim chose this model over the others

Next Steps

At this point, you should have a good grasp on how our pricing model works. Here are some places you can go from here.

• Check out your monthly statement to see your processing fees in detail, and how much you’re saving with interchange plus.

• Go back and review the What am I paying for? and What is interchange plus? articles if you haven’t read them already!