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%