Processing Companies

There are various Merchant Processing companies that offer business solutions for accepting credit and debit cards, as well as other forms of payment. Here are a few things to consider before picking the right processor:

  • What are the processing rates for Visa/MasterCard?
  • What are the monthly and annual fees involved?
  • How long is the contract for?
  • How much is the cancellation fee?

There are two different pricing methods for accepting Visa/MasterCard: 3-Tier Program and Interchange Rates.

Three-Tier Program
Visa and MasterCard issues about 200 different types of credit cards. In the 3-Tier Program, these are grouped together into just three categories: Qualified (cheapest), Mid-Qualified, and Non-Qualified (most expensive). Each card is processed at a fixed percentage in one of these categories. In addition, the business owner will pay cents per transaction on each card.

Interchange Rates
Each type of Visa/MasterCard credit card offers all sorts of bonuses and points to their users. In reality, it’s the business owner who pays for the customer’s points on these cards. Each card is issued a percentage at which it will be processed through the merchant’s credit card processing. After which, the business owner will pay several basis points (1 basis point is 1/100 of a percent) plus additional cents per transaction.

Business owners should shop around when choosing the best pricing program. The Merchant Processing industry can be highly competitive; and some lenders are not compatible with some processors. Also, several business owners may not be qualified for Split-Processing. Keep these in mind before committing to a pricing program.