The TRUTH About Credit Card Proccessing

Blog|Payment Processing

“Secrets The Processors Don’t Want You to Know”

Pricing Games:

Most Processors offer a pricing modle known in the industry as “tiered pricing”. Tiered pricing gives the Processor a great amount of leverage in the relationship with the merchant. A competitive “Rate 1” or “Qualified” rate is quoted to the merchant. Hefty surcharges for rewards, hand-keyed, corporate cards, etc. are then found in the fine print. Processors are free to qualify transactions however they wish. Over time, Processors raise rates and adjust card qualification criteria to capture more and more revenue. 

Rate Increases:

As Visa and Mastercard adjust *Interchange rates, Processors pass on the increases and pocket the decreases. Yes, there are decreases in interchange. For example, Mastercard decreased its swiped rate recently. And of course most Processors failed to inform their merchants of that decrease. When Interchange increases, many Processors pad the increases passed on to their merchants. Over time, the Processor’s profit margin on a merchant continues to grow. 

An Honest Approach with Swypit:

Cost Plus Pricing: 

In the past the Cost Plus pricing model has been reserved for large national merchants. Recently it has been introduced to regional merchants as well. It is by far the fairest pricing model to offer a business wishing to accept credit cards. 

In this pricing model, *Interchange and **Assessments are passed directly to the merchant, with a separate fee added which goes to the Processor’s bottom line. 

Advantages of Cost Plus: 

  • The Business owner and the Processor agree to a set fee for the Processor’s service.
  • There are no hidden fees or surprises. All fee are fully disclosed.
  • Processors can not disguise profit within Visa and Mastercard Interchange adjustments.
  • Processors can not change card qualification criteria to add hidden profit


*Interchange – portion of a merchant fee that is paid to the issuing bank of a consumer’s credit card

**Assessments – portion of the merchant fee that is paid to the Association Visa or Mastercard