Don't Pay More with Acumatica and Tiered Pricing for Credit Cards

Why is Tiered Pricing for Credit Cards with Acumatica more Costly? 

Mastercard and Visa recently announced they will not enact Interchange increases for online purchases until April 2022 while the economy recovers. However, you may still see price increases if you’re on tiered pricing for Acumatica credit card processing with Acumatica. In this blog, we'll explain why other pricing models like interchange may be a better choice for your business. 

Tiered Pricing is Not What It Seems on the Surface

Many are feeling the pressure to reduce costs, and one way is by negotiating potentially lower rates for your Acumatica credit card processing. There are different pricing models when it comes to processing payments. One that we generally don't recommend without close analysis is tiered pricing.

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

Each transaction in the tiered pricing model 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.

Unfortunately, many companies with a tiered pricing model find out quickly is that it may be the most expensive of the four pricing models. It’s a bucket system where a debit card falls in this tier; and if it's a rewards card, it falls in this tier; and if it's a business card or corporate purchasing card it falls into this tier. Each tier or bucket’s pricing consists of a specified percentage based on the sale amount that factors in the current rate charged by the payment network, a fixed transaction fee, and you will usually pay a monthly fee to the processing provider.

Why the Tiered Pricing Model May Cost More

A common tier structure you’ll see is bucketed based on qualified, mid-qualified, and non-qualified transaction types. In this case, the qualified tier has the lowest rates, and are the most expensive is the non-qualified tier. That sounds good initially and it’s certainly easy to calculate. However, what we see is that the three buckets as classifications are so broad, you start paying 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.

Also, watch out for tiered pricing 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 like we have been in increasing amounts lately. In each of those situations, you’re going to pay mid- or highest-tier rates.

And because the payment processor can charge whatever they feel like for that tier and what falls into which tier, when Visa and Mastercard lower rates or keeps them steady as they did recently, you could still see fee increases from your payment processor regardless.

Start Saving with Help from Paya's Integrated Payment Experts

Paya is the leader in delivering simpler, more efficient, and deeply integrated payment solutions with more than 25 years of industry experience and 2,000+ industry customers and partners. Paya is committed to delivering best-in-class integrated payment solutions across the full suite of Sage ERP products. We are proud to be Sage’s preferred partner for Integrated Payments in the US.   

At Paya we are unique from our competitors because we emphasize solutions engineering, engaging our domain experts as part of the early sales process. Through a collaborative but simple hands-on process, we develop a deep understanding of our partners’ current processes and pain points and requirements to ensure you get a platform and system with the capabilities you need. Paya has enabled businesses to optimize billing and invoice processes, deliver more payment options and flexibility to their customers, and improve back-office efficiencies.

Contact Paya's Acumatica Integrated Payments team to schedule a free consultation today! 

Learn more about how our credit card processing experts, solutions, and processes can benefit your organization and save you money!! 

See Paya's Acumatica Integrated Payments solution on ERPVAR's site.