What really is a “Cost – Plus” Pricing Model ?
Up until the recent past, most card activity has been is processed in what is called “Bundled or Tiered Pricing” models, which comprise a price structure that lumps groups of card types with different costs and processes them at the same higher average rate.
In this model, designed on 3 or 4 basic levels, card fees are always downgrading (moving up in cost) to the next highest level of tiered pricing. This creates cost points that are higher than what is necessary. This “3 Tier Pricing” or even 4 Tiers is the model that is conservatively in place with about 90% of the market. Result – most merchants are overcharged!
It is not unlike the model employed by the Square and PayPal e-commerce accounts where they charge you 1(one) fee for all your cards. Many if not most of those transactions actually process well below that “one fee fits all” level. On total monthly card transaction volumes over $5K this becomes expensive for most merchants.
Over the past several years the pricing program which has expanded that in most cases yields a better pricing model aka “Cost-Plus” is called “Interchange” Pricing. “Interchange” is the term used for the rates that all the credit card processing companies are provided from Visa and MasterCard. Simply put, in “interchange” pricing, calculated fees are based on marking up the actual dozens of specific MC/VISA rate categories a small but FIXED percentage amount of “basis points” (usually less than 1%), plus the per-transaction fee (sometimes called the “per item” fee).
The result here is that by pricing the account in this manner, there will be extra savings generated because the “Bundled Pricing” model doesn’t allow you to receive the lower rate for cards that are at a lower MC/VISA cost structure.
Secure Data Payment Systems(SDPS) is bringing you a program formerly provided only to MC/Visa’s largest users, about 5-10% of the market place. This matches the rate program of many larger processors, like Amazon, Macy’s and Bloomingdales and is now being made available based on a special agreement with our platform partners.
Key features are:
- a model that offers you true “interchange-plus” pricing
- an easy turn-key opportunity to lower your net MC/Visa costs compared to your existing model
- a value proven financial structure whose margin is hard coded above cost and fixed there
- a capability to create an ongoing “net-net” base cost scenario
In a nutshell, our program will allow you to process all your transactions at a fixed cost over MC/VISA’s base cost to banks. We are totally transparent with our pricing, so you will see every card’s cost and your fee per card.
- No generic pricing, no bundled rates, no misunderstood fees.
- All of your transactions going through the system at the lowest possible cost. .
- No smoke and mirrors, no clouds.
- We help you lock in the savings and take them to the bank!
By comparing our service to what you’re currently using or others you are considering, you’ll likely see a savings of 10% to 30%. We’ll even provide you with the rates that MC/VISA charges the banks on your statement.
Let us manage your program for you!
So let’s get a conversation started to help you get your fees down…..start now!
If you have not had a rate review in at least 12 months….you’re due.