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Of the two common pricing models, smaller businesses with low transaction volumes tend to prefer Blended pricing, whereas businesses with large volumes, or varied transaction types find Interchange Plus Plus (IC++) more suitable.
Card Charges Explainer
There are two main pricing models when a business is charged for accepting card payments. Interchange Plus Plus, and Blended. Let's discuss the pros and cons of each, to establish the best model for your business, starting with Interchange Plus Plus, referred to here, as IC++. We will be using some terms that you may not be familiar with, so we have provided a useful glossary that you can refer to, using the DEFINITIONS option on the main menu above. Now let's dive into IC++.
Interchange Plus Plus (IC++)
Structure
This model separates the interchange fees, assessment fees, and the processor's markup, providing the breakdown of what you are being charged.
Transparency
You can see the exact interchange rates and assessments, which vary by card type and transaction.
Customizability
You can better understand and optimize costs based on your specific transaction types and card mix.
Scalability
Businesses with higher transaction volumes can potentially negotiate lower processor markups. IC++ is better than Blended if your business processes a large number of transactions, through better cost management and negotiation. If your customers use a mix of debit, credit, rewards, and premium cards, or your business handles a variety of transaction types (e.g., e-commerce, in-store, or mobile), IC++ provides more control over managing different fee structures. Also, if you process a lot of international transactions, IC++ helps you understand the specific fees associated with different regions and card types, leading to significant savings.
Blended pricing
Now let's discuss where Blended pricing Might Be Preferable.
Structure
Blended pricing combines all fees into a single rate, regardless of card type or transaction details.
Simplicity
Blended is easier to understand since you pay a single rate for all transactions.
Predictability
Blended provides consistent costs for budgeting and forecasting. Small businesses with fewer resources to manage and analyse detailed fee structures might benefit from the simplicity of Blended pricing.
In conclusion
Choose IC++ if you have high transaction volumes, a varied card mix, and the capability to analyze and optimize costs. The transparency and potential for cost savings can be significant. Choose Blended pricing if you are a smaller business, and prefer simplicity, consistent costs, or have lower transaction volumes. The ease of understanding and predictability might outweigh the potential cost savings from IC++. Please note that whichever pricing model is used, the actual fee percentages per transaction that your business is charged, will depend on a number of factors, including the type of business activity you are engaged in, your predicted card volumes, and average transaction values etc. You will be advised of the rates offered, once you have completed your application form, so why not click the SPEEDY DECISION button below to start the process. We hope that this explanation has been useful, thank you.