Tiered Pricing vs Interchange Plus for Sage 100 Payments

Beware of Hidden Fees in Your Sage 100 Payment Solutions Agreement

If you’re shopping for a new Sage 100 credit card processing solution, ensure you're educated on the specific calculation methods of each pricing plan option that will be presented to you. To help you choose the pricing model that’s right for your business, here is an overview of two standard options you may see: tiered pricing vs interchange plus pricing.

What Is Tiered Pricing?

Tiered pricing is often a simple means of categorizing transactions into three buckets. For instance, debit, rewards, and mileage cards may fall in different buckets. There might not be any logical rationale for which transactions go in which bucket.

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.

In another example, your transactions may qualify for the lowest rates based on whether it was swiped or keyed. In most cases, the fees are greatest when the transaction is keyed. If your business is entirely online, your transactions are never swiped. then you'll never qualify for the lowest rates.

What Is Interchange Plus Pricing?

With the Interchange Plus pricing model, your payment processor will separate all your fees.  This makes predicting and calculating your eventual fees on each transaction is much easier and less complex.

Which Pricing Model is Less Expensive?

Historically, the interchange plus pricing approach will keep fees down. It’s an affordable way of calculating fees for all kinds of business types and it has a fee structure that gives merchants the most transparency.

Sadly, what many companies on the tiered pricing model experience are that it is actually the most expensive of the many pricing models. In just one example, Mastercard and Visa announced they plan to hold off on Interchange increases for online purchases until April 2022 to help the economy recover. If Interchange rates go down, your fees go down as well. But if you have a tiered pricing plan, your payment processor can increase your rates even when Visa and Mastercard lower rates or keeps them steady.

Tiered Pricing Can Be Advantageous for Some

A tier structure you’ll frequently encounter is referred to as qualified, mid-qualified, and non-qualified. Rates are generally most expensive in the non-qualified tier and the least expensive in the qualified tier. This can be a good plan for you if your most frequent transaction types fall into the qualified bucket. If not, this plan won't be right for you.

For instance, often tiered plans consider your transaction qualified where “card present with signature.” That's a great option if you're a coffee shop that conducts all your sales in person and you can ask them to sign. But that won’t be a good option if your sales are all online. You’ll never qualify for the lowest rates because you’re never present with your customers to get their signatures.

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

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 greater 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.