Flat rates for merchant accounts make the accountants and business owners’ lives much simpler. However, the fact is that there is nothing called flat fees with respect to merchant accounts. Luckily, some fees close to flat rates exists. The flat rates do not reduce the processing charges to a distinct rate. Pricing plus interchange is applicable to flat mark-ups of discount fees.

Almost all the merchant accounts are on the basis of bucket or tiered pricing with non-qualified, mid-qualified and qualified discount rates. This model gives way to a concept known as interchange plus which is applicable to the direct mark-up of flat rate merchant accounts which can be achieved by a business.

The processing charges for merchant accounts are on the basis of MasterCard or Visa interchange repayment schedules. These schedules are responsible for the amount of transaction of a credit card an acquiring bank of the merchant should shell out to the issuing bank of the cardholder. The inner mechanism of this process is quite complicated. However, one must know that various interchange charges are applicable to the credit-card transactions.

Due to the existence of various discount categories, a true flat-rate merchant account can never exist. However, this point is not completely true. If a merchant aggress to shell out for the highest interchange category, then he/she can have a merchant account with flat rates. However, the price for this type of account could be needlessly astronomical. Merchant accounts having single mark-ups plus the interchange is the nearest thing to merchant accounts with flat rates. The other alternative to this is tiered accounts which group all the different charge categories into a few buckets.

According to a merchant service firm’s CEO, the pricing plus interchange of tiered rates is a “big joke”. The “joke” applies to dealers who pay fluctuating mark-ups after which they end up losing money in the process. After understanding about the transparency in interchange pricing and its benefits, they will realise the fact about tiered rates.

After knowing the benefits of interchange, it is also necessary to have knowledge about the associated risks. The service providers for merchant accounts have risks and real cost associated in their job. Tiered margin provides the service providers of merchant accounts a wider margin when compared to interchange pricing. Since the service providers could lose money in providing interchange pricing, it is not offered to all the merchant account holders keeping their feasibility factor in mind.

A few businesses, especially the newly established ones, will probably not acquire interchange pricing. However, this fact must not be considered a as a big deal. This is because there are several reasonable tiered accounts which can be obtained. The best processor for credit cards is achievable even by having tiered accounts. After the processing has begun, a merchant always has the option of switching to an interchange account sometime later. Hence, there is little cause of worry if a merchant is unable to get as interchange account right away.

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.