What is Tiered Pricing?

Tiered pricing (also known as qualified / non-qualified pricing) is a pricing method used by nearly every payment processor in the US. This is the most common pricing method offered to small businesses. Unfortunately, that's in the benefit of the processor and not the merchant, as tiered pricing is often used as a 'teaser' pricing method that can actually be quite expensive.

How Does it Work?

The processor will offer you three tiers, such as:

Qualified Rate1.69%
Mid-Qualified Rate1.20%
Non-Qualified Rate1.70%

While there are hundreds of different types of credit cards in the US. For this example, let's simplify it by looking at 3 different credit card types:

Visa Basic ConsumerVisa Rewards CardVisa Signature Elite

 

Visa Basic ConsumerVisa Rewards CardVisa Signature Elite
QualifiedMid-QualifiedNon-Qualified
1.69%1.69% + 1.20% = 2.79%1.69% + 1.70% = 3.39%