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Sage 100cloud Payment Processing: Tiered Pricing vs Interchange Plus

Why Customers Using Sage 100cloud Payment Processing Should Consider Options Today

If you’re shopping for a new payment processor, it’s important to be educated on the advantages and calculation methods of each of the pricing plan options you have and compare that to your historical usage. To help you choose the pricing plan that’s right for you, here is an overview of two options you may be considering: tiered pricing vs interchange plus pricing.

Sage 100 Credit Card ProcessingWhat Is Tiered Pricing?

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.

Tiered pricing is basically a system of categorizing transactions into buckets. For instance, 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. The amount you pay on the transaction is determined by the bucket it falls into, and each tier is usually progressively more expensive. Your fees will consist of a specified percentage based on the sale amount, a fixed transaction fee, and often a monthly fee paid to the processing provider.

What Is Interchange Plus Pricing?

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) charged for that transaction (referred to as Interchange), plus the payment processor’s markup, and a flat monthly fee.

Which Pricing Model Costs More?

What many companies on the tiered pricing model come to find out quickly is that it is actually the most expensive of the four pricing models. Mastercard and Visa announced recently they plan to delay Interchange increases for online purchases until April 2022 while the economy recovers, but you may see price increases if you’re on tiered pricing credit card processing because the payment processor can charge whatever they want for that tier, even when Visa and Mastercard lower rates or keeps them steady. Your payment processor can just decide to raise your fees.

Historically, the interchange approach to pricing is your safest option for keeping fees down. For example, 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 its fee structure gives merchants the highest transparency. It will be easier to calculate and predict what’ll you pay to the card network and to your credit card processor.

Tiered Pricing Can Be Advantageous With the Right Due Diligence

Obviously, there must be a reason payment processors offer tiered pricing. There are some rare situations where the right tiered pricing can be right for your business. A common tier structure you’ll encounter is referred to as qualified, mid-qualified, and non-qualified. Rates are most expensive non-qualified tier in most cases, with the lowest rates typically seen in the qualified tier.

Because you won’t get a say in the tier structure or qualification, it’s important to clearly understand your historical usage, including the breakdown of the card types you accept most. For example, if you find a tiered plan where “card present with signature” is considered qualified which is the least expensive tier, that won’t be a good option for you if you only sell online. You’ll never qualify for the lowest rates because you’re never present with your shoppers.

Find a Trusted Sage 100cloud Payment Processing Partner

Having an experienced partner in payments helping guide your selection can help you avoid a lot of traps. 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 Sage 100cloud 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.