Understanding Payment Processing Fees

Overview

Supermove offers its own Payments processing feature to allow your team to process pre-move deposits, collect credit card information for last-minute customer cancellations, trigger monthly storage invoices, and complete transactions for finished moves directly within the app. 

Decisions on whether to use Supermove Payments can often come down to processing fees and the impact this has on your business. This overview provides an explanation on credit card processing fee structures to help you compare and contrast your card processing options in making an informed decision. 

Types of Credit Card Pricing Structures

Pricing structures offered by card processors generally fall into one of the following categories:

• Flat Rate Pricing
  Typically the most common type of payment structure offered, Flat Rate pricing provides a simple and straightforward method for merchants to understand their costs. Quite simply, a processor offering a flat rate price of 2.8% means that any card transaction will incur a 2.8% processing fee. This method is reliable and predictable for merchants to understand and can be most aptly suited for small-to-medium sized businesses that run a moderate volume of card transactions. 
  
  
• Interchange Plus Pricing or Cost Plus Pricing
  Instead of a fixed rate, the processor will instead customize the fee based on the rate charged by each card-issuing bank. For example, let's say a processor is offering a price structure of interchange plus 0.2%. This means if Visa charges a fee of 2.2%, then the processor will simply increase that to 2.4% as the total processing fee to the merchant for any and all Visa transactions. Unlike the flat rate pricing example above in which all cards were assessed a 2.8% processing fee, the merchant using interchange plus in this new scenario would find a savings when processing Visa transactions. Keep in mind, though, all cards have different interchange rates. So while a merchant might incur less fees from Visa, there may be higher fees on MasterCard transactions.
  For merchants, this cost plus pricing does require a detailed understanding of the different fees banks may charge for your particularly industry. While the fees per card will vary, this pricing structure can be very cost-effective for businesses that manage a large volume of transactions.
  
  
• Tiered Pricing
  Unlike a cost plus structure in which a processing fee is applied to each card-issuing bank, a tiered structure groups card-types and applies a rate for that particular group. The types of tiers are organized as Qualified (e.g. debit and non-rewards credit cards), Mid-Qualified (e.g. rewards credit cards), and Non-Qualified (e.g. high-risk or card-not-present transactions). These tiered models can be opaque to the merchant, because the processor is not responsible for detailing how or why certain cards are grouped into which tier or the calculation in determining the rates for those tiers. Because of this, tiered pricing has fallen in favor amongst merchants. 
  
  

Understanding the Ideal Pricing Structure for Your Business

When evaluating your payment processor options, you may want to consider the following:

• If you're a new business owner and want to keep things simple...
  Then you may benefit the most from a flat rate plan. Credit card processing fees can be complicated and overwhelming. With this flat rate approach, the amount you pay will be the same for every transaction, which can be refreshingly simple. 
  
  
• If you value transparency and want to further grow your business...
  Then cost plus pricing can be a good fit for you. By receiving an itemized monthly credit card statement from your processor, you'll always see the fees for each transaction and you'll understand if you're paying a fair price. In addition, as your transaction volume grows, this pricing structure can become more economical as you won't incur a markup that can sometimes be found with other processing plans. 
  
  
• If you want the potential of savings...
  Then maybe the tiered structure. If you know that you process a majority of your transactions from the most qualified tier with your processor, then you may benefit from savings with this pricing structure. However, this model is not very transparent to merchants and there is a risk of ultimately paying more than a flat rate or cost plus plan.

With the number of card processors available, it is important for merchants to fully evaluate and understand these key pricing structures in making their decision.