At Beacon Payments, we believe in transparency and helping merchants choose the pricing model that fits their business best. In this post, we’ll break down the most common types of merchant account pricing, how they work, and the pros and cons of each.

1. Tiered Pricing

What it is:
Tiered pricing (also called “bundled pricing”) groups transactions into categories—typically Qualified, Mid-Qualified, and Non-Qualified—based on card type and how the transaction is processed.

How you’re charged:
Each tier has a set rate. For example:

• Qualified: 1.59%
• Mid-Qualified: 2.25%
• Non-Qualified: 3.25%

Pros:

• Easy to understand on the surface
• Predictable rates for basic transactions

Cons:

• Often lacks transparency—it's hard to know how transactions are being categorized
• Many cards fall into the more expensive Mid or Non-Qualified tiers
• Not ideal for businesses accepting a wide variety of card types

2. Interchange-Plus Pricing

What it is:
Also known as cost-plus pricing, this model separates the true cost (interchange fee) from the processor's markup. It’s one of the most transparent and fair ways to price credit card processing.

How you’re charged:

• Interchange Fee (set by Visa/MC) + a flat markup (e.g., 0.30% + 10¢ per transaction)

Pros:

• Transparent—you see exactly what the card networks charge and what your processor earns
• Fair pricing, especially for businesses with higher volume
• Easy to compare providers based on markup

Cons:

• Statements can look more complex
• Interchange fees vary by card type and method of payment

3. Flat-Rate Pricing

What it is:
Flat-rate pricing charges a fixed percentage on every transaction, regardless of card type or how the card is processed.

How you’re charged:
For example, 2.6% + 10¢ on all card-present transactions.

Pros:

• Simple and predictable
• Easy for new or small businesses to understand

Cons:

• Typically more expensive than interchange-plus for higher-volume businesses
• You may end up overpaying for transactions that would cost less on other models

4. Subscription or Membership Pricing

What it is:
You pay a flat monthly fee for access to wholesale interchange rates, plus a small per-transaction fee.

How you’re charged:

• Monthly fee (e.g., $99)
• Per transaction fee (e.g., 10¢)
• No percentage markup

Pros:

• Can be extremely cost-effective for high-volume businesses
• Transparent and predictable
• Access to true cost of interchange

Cons:

• Monthly fee may not be worth it for low-volume businesses
• Requires close monitoring of volume to ensure value

5. Cash Discounting & Dual Pricing (Bonus Option)

What it is:
These models pass processing fees on to the customer when they pay by card, offering a discount to those who pay with cash.

How you’re charged:

• The customer pays a small service fee on card payments
• You keep 100% of your sale, and use the service fee to cover processing costs

Pros:

• Significantly reduces or eliminates processing fees
• Popular with small businesses and service providers

Cons:

• Must be implemented carefully to stay compliant with card brand rules
• Some customers may be sensitive to added fees

The right pricing model for your business depends on your industry, transaction volume, average ticket size, and how you accept payments (in-person, online, mobile, etc.). At Beacon Payments, we help merchants choose the most cost-effective and transparent pricing structure—so you can save money, increase margins, and focus on growth.

Not sure what you’re paying now?

Contact us today for a free statement analysis and we’ll show you exactly how your current pricing stacks up—and where you can save.