Transparency

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"The Name of The Game".

The terms, Payment Processor, Merchant Service Provider: Independent Sale Organization (ISO), Member Service Provider (MSP) or a Payment Service Provider (PSP) have been used interchangeably, creating a confusion on "Who-Is-Who".

A Payment Processor, actually runs the transaction on the back-end, while the others are third party companies that provide the tools and support for a business to accept payments.

A Payment Processor would be; Adyen, Bank of America, Chase Paymentech, Fiserv, just to name a few. While a Independent Sale Organization (ISO) - registered with VISA, Member Service Provider (MSP) - registered with Master Card and a Payment Service Provider (PSP) - unregistered are third party components for accepting payments.

Please Note: Payment Processors, ISO or MSP provide individual merchant accounts with "Merchant Identification Numbers" (MIDs). While a PSP does not provide individual merchant accounts and all payments are pooled into one account.

The information provided is by "NO MEANS" stating or implying anything negative towards anyone or company. It's just to clarify, "Who-Is-Who"!

Payment Solutions

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"No One Size Fits All".

Depending on your business, a Merchant Service Provider may use one of these various pricing models; Interchange Plus, Membership, Flat Rate or Tiered to accept payments.

Each pricing model uses, "Basis Points" or "Percentage" along with other fees like; Interchange, Assessment, Transaction Fee, just to name a few to estimate your overal processing cost.

Merchant Service Providers also use information from; type of business, volume of transactions, average ticket, type of transactions and more to find the right solution. Needless to say, it's complicated but part of the process.

Processing Example: 20 Basis Points (bps) equates to 0.20% or 2.6% Percent equates to 260 Basis Points. You do the math. In the end, it's up to you to understand all the fees because not all providers, provide clarity or relevant information.

Interchange Plus

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"Most Transparent".

Interchange Plus benefits a business that process a high number of transactions.

The Interchange is a fee set by the card network; VISA, Mastercard, American Express, Discover (fees vary). The Plus, which is your merchant provider markup applied to each transaction.

Also, what affects the final cost is the type of card being used; credit, debit, personal or business and how it's processed, swiped, hand-keyed or online transactions.

Membership

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"Monthly Fee To Process".

Monthly Membership or Subscription payment processing is NO DIFFERENT than the other types of processing, just under a different name.

Your processing and transaction fees might be included or hidden in your monthly membership or subscription fee. Basically, you pay a montly recurring fee in hopes to get a lower processing rate and transaction fee, which could simplify monthly expenses..

Flat Rate

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"Fixed Percentage".

Fixed Percentages can range from 2.6% - 3.5% or higher. Like other pricing models, what determines the rate will vary on the card type; credit, debit, personal or business and how it's used, swiped, hand-keyed or online.

Let's break it down. The rate of 2.6% - 3.5% equates to 260 - 350 Basis Points (bps) is VERY HIGH, but may include all other fees. It could make it easier to understand and predict your month-to-month cost.

Just remember, this rate is suitable for "minimal volume transactions", so careful using it for high volume transactions.

TIERED

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"Inconsistent and Expensive".

Depending on the card type, each transaction will fall into "One of Three Tiers or Buckets".

QUALIFIED (debit and credit cards without rewards programs)

MID-QUALIFIED (credit cards with certain types of rewards programs)

NON-QUALIFIED (corporate credit cards with large rewards programs).

Each TIER will have it's own rate and fees making it the most inconsistent and most expensive with various bucket charges.

Please Note: If using Tiered pricing, understand and know your customers card use to create pricing buckets.

Fee Summary

With each pricing model, merchants typically pay a combination of fees: Interchange, Assessment, Processing, Transaction, Gateway, Monthly Minimum or Monthly Service.

Depending on your business classification determined by Merchant Category Codes (MCC), it's possible you may only pay some or all of these fees. But it's up to you to understand which fees are applicable and the cost to process crdit and debit cards.

Please Note: Anyone using merchant services pays the Interchange and Assessment Fees, it's non-negotiable.

WEBRIETY

A Digital Solutions Company