What is a Tiered Pricing merchant structure?

Tiered Pricing, also known as bundled pricing, is a credit card processing pricing structure where your transactions are grouped into three pricing tiers, each with different rates. As a merchant, this means the fees you pay depend on the type of cards your customers are using. 

How does it work for you?

Different cards used during each transaction fall into one of the following tiers:

• Qualified: typically includes card-present transactions using standard debit or non-reward credit cards. These typically receive the lowest processing rate.
• Mid-Qualified: includes transactions with rewards or loyalty cards, or those manually keyed in. These are typically charged a moderate rate.
• Non-Qualified: includes high-reward, corporate, international, or card-not-present (CNP) transactions. These are subject to the highest fees.

What are the benefits of Tiered Pricing?

• Simplicity: with only three rate categories, it’s easy to understand at a high level.
• Familiarity: this model is commonly offered, especially for newer or high-risk businesses. 

What should you watch out for?

• Unable to pre-determine card qualification: it’s completely up to your customers what cards they use. Their cards falling into tiers may be out of your control.
• Varying costs: your fees can fluctuate month-to-month depending on the types of cards your customers use.

To secure the best tiered rate, ensure that you’re keying less transactions, utilizing your credit card equipment properly, and settling authorizations on time.