Flat rates are easy for most business owners to understand. You pay a flat percentage for your processing and you can forget it’s there. While you may have temporary peace of mind, flat rate processing may be a major drain on your bottom line.
Flat rate pricing is designed to be simple, but not cost effective. Because cards vary by the brand and the affiliated bank, flat rates tend to over generalize these fees thus greatly increasing the chance for business owners to pay a higher markup on the processing fees without truly realizing it. The more volume you process the bigger this drain becomes. In short, you could be greatly overpaying for an over simplified solution.
Interchange or cost-plus pricing has been proven to provide the most cost savings for merchants. On average, most business owners can save up to 40 percent on their processing. While it takes time to understand, it provides business owners the most transparent cost structure and highlights the exact markup fee the processor takes with them. This gives merchants more clarity around their statements and obtains more cost savings for their business in the long run.