Flat-rate pricing

By Onkore

Flat-rate pricing is a simplified and straight forward model for credit card processing, where merchants are charged a fixed fee or percentage for each transaction, regardless of the type of card used or the interchange fees associated with the transaction. This model is easy for merchants to understand, as they pay a consistent rate for all transactions.

Example of Flat-Rate Pricing:

Let's say a merchant signs up for a flat-rate pricing plan of 2.5%. This means that for every transaction processed, the merchant will be charged a fee equal to 2.5% of the transaction amount, regardless of the card type or other factors.

1. Transaction Amount: $100.00

2. Flat-Rate Percentage: 2.5%

Calculation:

• Flat-Rate Fee: 2.5% of $100.00 = $2.50

In this example, the merchant would pay a flat fee of $2.50 for processing a $100 transaction. The simplicity of this model makes it easy for businesses to predict and budget for their payment processing costs.

It's important to note that while flat-rate pricing is simple, it may not always be the most cost-effective option, especially for businesses with a high volume of transactions or those processing a significant amount in sales. In cases where interchange fees for certain card types are lower than the flat rate, businesses might save money with a more detailed pricing model.

Additionally, some flat-rate providers may include other fees, such as a per-transaction fee or a monthly fee, so merchants should carefully review the terms and conditions of the agreement to understand the complete cost structure.

Businesses with lower transaction volumes and those seeking simplicity in their payment processing often find flat-rate pricing convenient and transparent. However, businesses processing a higher volume of transactions or those with specific requirements may benefit from exploring interchange pass-through pricing or other customized models.