(888) 791-9390 ext. 101 info@vipintegratedpayments.com

Beware of Tiered Pricing Credit Card Processing for Acumatica

tiered pricing credit card

Why Should You Beware of Tiered Pricing Credit Card Processing for Acumatica? 

The credit card processing pricing models have evolved over time because not all companies have the same transactions.  Usually, the goal of pricing is to collect the most from the customer. Luckily, our goal is to find ways to save you money not charge you more. Recently, Mastercard and Visa announced they plan to delay any Interchange pricing increases for online purchases until April 2022 to give the economy time to recover.  Unfortunately, you may still see price increases if you’re on tiered pricing credit card processing for Acumatica.

Tiered Pricing is Not What It Seems

Tempted by the possibility of negotiating lower rates during the recent and continuing economic interruption caused by the pandemic, many merchants like you started shopping around for better rates.  There are all sorts of different pricing models when it comes to processing payments. One that is a red flag is tiered pricing.

If you haven’t heard of it, the tiered pricing model is defined this way by The Ascent:

In the tiered model, each transaction is grouped into one of the payment processor's tiers, and each tier has a set fee amount. The payment processor determines which transactions go into which tiers, and it often bases this on a transaction's interchange fees, which are included in the rate.

Many companies on the tiered pricing model come to find out quickly that it's actually the most expensive of the four pricing models. Essentially, it’s a bucket system where a debit card falls in this bucket; and if it's a rewards card, it falls in this bucket; and if it's a business card or corporate purchasing card it falls into this bucket. Each bucket’s pricing consists of a specified percentage based on the sale amount, a fixed transaction fee, and you will usually pay a monthly fee to the processing provider.

Why the Tiered Pricing Model Can Cost More

A common tier structure you’ll encounter is referred to as qualified, mid-qualified, and non-qualified. In the qualified tier, rates are lowest and are the most expensive in the non-qualified tier. That sounds good on the surface and it’s easy to calculate for the most part. However, what ends up happening is that the three buckets as classifications are so broad, inevitably you start to pay more for transactions that are deemed mid- or non-qualified by the processor. You don’t get a say in the determination of the tier when you take the payment, so if corporate cards are considered non-qualified by your processor, you’re always paying the highest rate.

In another example of a tiered pricing approach that may cost you more than some others, watch out for those based on whether a credit card was swiped or keyed. In other words, it doesn’t matter if it’s a corporate card or personal card, if you don’t swipe it, you’ll never get the lowest rate. Payment processors favor this model in general but especially now because card-present transactions are much less frequent when we order online or place orders over the phone. In each of those situations, you’ll pay mid or highest-tier rates.

And because the payment processor can charge whatever they want for that tier, when Visa and Mastercard lower rates or keeps them steady, you could still see fee increases from your payment processor if they decide to.

Look for Interchange Plus Pricing

Historically, the interchange approach to pricing is your safest option for keeping fees down. In this model, the payment processor will keep all your fees separate. Companies like VIP Integrated Payments will charge you exactly what the payment network (Visa/Mastercard) charges on the transaction (known as Interchange), plus the payment processor’s markup, and a flat monthly fee.

At VIP Integrated Payments, we typically advise our clients to consider the Interchange Plus pricing model. It’s affordable for all kinds of business types and it has the most transparent fee structure. It’s going to be obvious and predictable what you paid to the card network and to your credit card processor.

Next Step – Work with a Trusted Acumatica Credit Card Partner

The other easy way to avoid all these concerns is to find a trusted expert to guide you. VIP Integrated Payments is a leading provider of integrated payment technology solutions to North American merchants. We are differentiated by our strategic partnerships and multiple platform model. VIP provides a broad suite of end-to-end payment solutions and superior US-based customer support. We have spent more than 25 years integrating and developing relationships to help you get the best deal.

Our VIP credit card processing solutions integrate seamlessly with your Acumatica and most other ERP/accounting systems, allowing you to accept credit card payments inside your software. The integration automatically posts payments to invoices, so there’s no need to go back into your program at the end of the day to reconcile your invoices or balance your general ledger, saving you hours and headaches.

Contact our experts at VIP today to start saving time and money with Acumatica ERP integrated credit card payments. You can reach VIP by phone at (888) 791-9390 ext. 101 or email us at info@vipintegratedpayments.com.