Stuck Up Between The Difference Of Interchange Credit Card Processing and A Flat Rate Credit Card Processing? Let’s Clear It All!
A business pays for their products and service credit card processing commonly using two ways, such as a flat rate credit card processing and an interchange-plus credit card processing.
Flat Rate Credit Card Processing With Quadrapay:
- The best flat-rate credit card processing usually is around 30 per cent per transaction fee and 2.9% for a month.
- A flat-rate merchant services provider can quickly approve a merchant so that they can start accepting payments.
- It is beneficial for startup businesses who are processing credit card payments under 20 thousand a month.
- A company which started achieving a credit card processing of 50000+ or 100000+ a month, the merchant might think that paying 2.9% will be easy, but they have to 30 per cent of the number of transactions as well. For instance, if you hit 500 trades in a month and you achieve an overall revenue of 50K.
- So, the flat rate credit card processing for this month will be 2.9*50000 dollars=1450 dollars, and 0.30 dollars per transaction fee* 500 transactions=150 dollars. Which means you have to pay 1600 dollars flat rate credit card processing for the month of having 500 transactions with a 50000 dollars revenue. So as an annually flat rate credit card processing fee for your business, you have to pay around 19200 dollars for these 50000 transactions.
Interchange Plus Credit Card Processing Model:
- A credit card provider or the issuing bank charges the charges for every number of transactions being done using the debit card or credit card payment.
- The Interchange Fee varies among cards to another different card provider.
- Usually, the interchange rate fee for the credit card is on average of 2 percent and 10 cents per number of transactions. While for the debit card it is set on average of 0.5 per cent and 22 cents per number of transactions.
- The merchant services fees usually charge on the above interchange fee around 20 cents per number of transactions and 0.5 per cent.
- For Example, if you gain 1000 operations and 100000 in a month which includes 60 percent of sales using credit cards payments and the rest of 40 per cent with a debit card.
- So, let us take the interchange rate is 2.05 per cent for the month and over that the payment processor has charged 0.20 per cent and 10 cents per transaction.
- The interchange charge will be 2.05 per cent of the 100000 will be 2050 dollars! and the cost per number of the operation will be around 148 dollars. So the payment processor will charge an additional of 0.20 percent and 10 cents per number of transactions which will be about 300 dollars. After taking the sum of all for the month of 1000, operations will be about 2,498 dollars, which means for that year you have to pay interchange plus credit card processing charges around 29,976 dollars annually.
Flat rate credit card processing is the best suitable solution regarding credit card processing for small business or a business startup. Because it is an easy solution and takes a few minutes to start accepting payments for your business, but you might have to switch to another model if you start achieving a large number of transactions and high revenue.
While an interchange plus credit card processing is beneficial for business that undergoes a lot of a number of transactions and high revenue as it saves a lot of in fees. But it takes time to get started with an interchange-plus payment processors approval which can take around up to 48 hours.
Quadrapay is an industry expert in merchant account and payment processing solutions. If you still have any queries regarding credit card processing solutions, We are available at [email protected].