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Pricing: A Must-Read Guide for Merchants
Merchants often ask us a common question: “What’s your rate?” However, it’s important to understand that many processing companies will entice you with appealing rates to secure your business. The catch is that those who offer extremely low rates or short-term incentives may end up being the most costly choice in the long run.
Beyond the initial rate, it’s crucial to consider the bigger picture of processing costs. In the processing industry, it’s common for companies to implement frequent rate increases throughout the year to boost their profit margins. Once you set up processing, you enter a system where rates gradually rise over time. Many merchants, understandably focused on running their businesses, may not notice these additional fees until they become substantial.
At Alliance, we proudly offer Interchange Plus Pricing, recognized as the most competitive pricing style in the industry. Our commitment to transparency means that we operate on slim profit margins, typically ranging from .0010% to .0025% above Interchange.
What sets us apart from other companies is our relentless dedication to ensuring our clients’ rates remain highly competitive year after year. At Alliance Payments, we go above and beyond by working diligently behind the scenes. Every three months, we conduct thorough account reviews to identify any minor rate increases that may have occurred. Our proactive approach allows us to promptly monitor and reverse these increases, ensuring that our merchants consistently benefit from lower rates as long as they continue processing with us. With Alliance Payments, you can trust that we prioritize your long-term success and work tirelessly to provide you with the most favorable rates in the industry.
Allow me to share a real-life example that illustrates the importance of long-term rate stability and the value we provide at Alliance Payments. We encountered a merchant who adopted a strategy of approaching multiple processing companies, selecting the one offering the lowest rate as the winner of their business. While we initially provided highly competitive rates, another company made enticing promises and secured the merchant’s agreement.
However, after three years had passed, the merchant reached out to us once again. They had experienced a significant increase in rates, resulting in an excess cost of $15,000 to $20,000. Recognizing the impact this had on their business, they decided to switch to Alliance Payments.
We are pleased to report that the merchant is now processing with us, and we are dedicated to ensuring they never face such inflated costs again. Our team works tirelessly on their behalf, proactively monitoring and maintaining their rates to guarantee ongoing competitive pricing and long-term savings.
This example serves as a testament to our commitment to our merchants’ financial well-being. At Alliance Payments, we strive to deliver not only initial competitive rates but also the unwavering support and rate stability that safeguards their bottom line.
Interchange Rates: Interchange fees are predetermined rates set by card networks like Visa, Mastercard, and American Express. These fees are based on factors such as the type of card, transaction type, and industry.
Transparent Pricing: With interchange pass-through pricing, the processor discloses the specific interchange rates to the merchant. The processor adds their own markup, typically a small fixed fee or percentage, on top of the interchange fee.
Cost-Plus Model: The merchant pays the actual interchange fee plus the processor’s markup. This ensures that the merchant knows the exact cost of each transaction and can see the interchange fee separately from the processor’s fee.
The benefits of interchange pass-through pricing include:
Transparency: Merchants can clearly see the interchange fees and understand the true cost of each transaction.
Fairness: Merchants pay the actual interchange rates set by the card networks, eliminating any hidden markups.
Customization: Merchants have the flexibility to choose processors based on their competitive markup rates, service quality, and additional features.
Interchange pass-through pricing promotes transparency and enables merchants to better manage their payment processing costs. By understanding the interchange fees and the processor’s markup, merchants can make informed decisions and potentially save money compared to bundled or tiered pricing models.