• STANDARD THREE TIER PROGRAM
• COST PLUS PROGRAM

The three tier program is one discount rate for all cards except AMEX. The rate quoted to the merchant needs to be based on how many check cards the business will process and the average ticket. If they process a lot of check cards like a restaurant, then we can forget about the MasterCard rates to some extent. The check card profit will more than make up for the loss we can have with MasterCards. A 1.69% plus $.20 is pretty standard in this senario.
If there are not a lot of check cards then we have to get above the MasterCard interchange rate that we are going to charge the merchant. A 1.79% is minimum but a 1.89% plus $.20 is preferred.

• VISA
  1.63% plus $.10 CPS Retail
  1.94% plus $.10 CPS Retail Keyed 
  We have to sell above these cost to make money.
  

• MASTERCARD
  1.73% plus $.10 Merit III
  2.05% plus $.10 Key Enter
  We have to sell above these cost to make money.
  
  
• DISCOVER
  1.63% plus $.10 CPS Retail
  1.94% plus $.10 CPS Retail Keyed 
  We have to sell above these cost to make money.
  

The COST PLUS PROGRAM is simple to understand and means exactly what it says. We charge the merchant our cost (interchange plus dues and assessments) for all transactions plus an additional percentage for our profit. This profit is 10, 20, 30, 40 or 50 basis points. Ten base point is related as 0.10%. Whatever profit level the merchant is charged determines how the % is written on the application, as shown below.


.10% discount rate = 10 base points
.20% discount rate = 20 base points
.30% discount rate = 30 base points*
.40% discount rate = 40 base points

* This is the rate charged on the cost plus program and usually beats the competition. Both plans must have a transaction fee of usually $.10.


Almost all rates are negotiated with the merchant and needs to be established by how the merchant conducts business, what his average ticket is and how much monthly processing volume the merchant will do.

The BUNDLED RATE PROGRAM requires some figuring before quoting the rates. Once you know the average ticket of the merchant it is best to go a little lower to figure the bundled rate. The way to figure this is to multiply the average ticket times a three tiered discount rate % and then add the transaction fee. The number you have now is divided by the average ticket and that is the bundled rate. The lower the average ticket, the higher the bundled rate will be.

Example:
$25 average ticket times 1.89% = .4725. Add a $.20 transaction fee and you have .6725. Divide this number by $25 and you have a bundled discount rate of .0269 or 2.69%.

Almost all rates are negotiated with the merchant and needs to be established by how the merchant conducts business, what his average ticket is and how much monthly processing volume the merchant will do.