Study Comparing Interchange Plus Pricing Structure Against Tiered Pricing for Small Business Owners

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Deciding on whether to go with interchange plus or a tiered structure pricing with a merchant account is a confusing decision for small business owners. provides a researched article on their website for small business owners facing this decision.’s James Brady, a writer knowledgeable in the merchant services industry, uses his experience and research to educate other small business owners. Specifically looking at credit card processing, there a two pricing structures- interchange plus and tiered- that Brady explains in full.

The interchange plus pricing structure ( is fairly straightforward once the basics are laid out. Brady explains interchange plus pricing as the true cost: “Interchange is the true cost of the card, what Discover, MasterCard, and Visa charge merchant providers.” Typically this method of pricing is reserved for high volumes businesses with an established processing history. However, Brady warns new business owners not to discredit interchange plus pricing as it has recently become an option for new low volume businesses.

Tiered pricing ( falls into three structures: the qualified rate, the mid-qualified rate, and the non-qualified rate. Brady warns business owners, that while the qualified rate is the low and highlighted by providers it only covers a small segment of cards (debit cards and non-reward cards). Most cards used by customer fall into either the mid-qualified segment with ‘rewards’ cards or the non-qualified segment with corporate cards, international cards, and key entered cards on a swiped account. These structures have high percentages and may not be a cost effective option for business owners.

According to Brady at, interchange plus pricing is much “more transparent and potentially cost effective way of setting up a merchant account.” The tiered structure is an equally viable option but in the long run businesses may look to switch to interchange plus.

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