Understanding Your Payments Pricing Model

Whether we like it or not, we all live on a budget. One fear we all have is the idea that we may be paying too much or “wasting our money”. Here at Fattmerchant, we know that customers aren’t always aware that they are paying too much for their merchant services – and we want to change that. Whether you’ve experienced percentage markups, tiered rates, or other programs designed to inflate profits for the payment processing vendor, this fear has become a reality for many business owners. The good news is that Fattmerchant is here to help!

Percentage Markup

This pricing model is just how it sounds – providers will be charged interchange, as well as, an additional percentage for each transaction run.. Because interchange varies depending on card type, there isn’t a good way to predict what you’ll be paying each month with this pricing model. The more you process, the more in markups you’ll have to pay.

Flat Rate

Flat rate is a variation on percentage markup models. Instead of charging a percentage extra on top of the interchange (which means each card’s final cost will be different), flat rate models make each card the same percentage. The most popular example of this is Square. No matter what card is being used, you’ll always pay 2.9% with Square. This might seem like a good system at first, but the more you process, the more expensive it gets. This is especially true if you process a lot of cards with low interchange rates, like debit cards. These cards average an interchange around .5% – so 2.9% is an extremely large markup.

Tiered Rate

By far one of the most expensive pricing models, tiered rates put different cards in different tiers and charge based on those qualifications. The important thing to remember with this model is that the tiers are arbitrary and determined by the provider. They can take a look at the most popular card types, and then make sure they are in the most expensive tier.

These models usually go unquestioned since merchants often believe there is some sort of reasoning behind the groupings. Since there isn’t, it pays to have a frank conversation with your provider if you see any terms like “qualified”, “mid-qualified” or “non-qualified” within your statement.


Often the best choice for merchants is subscription based pricing models which happens to be our bread and butter. A monthly membership is paid in exchange for the direct cost of interchange. This means that no matter how much you process, you only ever have to worry about the direct cost of the cards you’ve processed in addition to a flat membership.

There are a handful of other companies that use subscription-based pricing, but here at Fattmerchant we are the only provider that can guarantee unlimited processing and absolutely no hidden fees.

Talk with one of our payment consultants today and we’ll tell you what pricing model you’re currently on, and how we can help save you money!

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