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The Real Reason Your Payment Processor is Costing You So Much

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Danny Randell | February 11, 2021

“Working with a payment processor can be a pain; Find out why your business could be paying too much for processing below.”
3 min read

    "Helcim provides credit card processing the way small businesses need it: with complete transparency." -PC Magazine

    Have you ever felt like you've fallen victim to a sales ploy? Or felt like you overpaid for something that definitely wasn't worth it? It can be pretty unsettling when that cognitive dissonance settles in and you're left to deal with the fallout. Needless to say, if there is one thing we can all relate to-it's feeling ripped off.

    One culprit of the post-purchase blues in business owners is the questionable tactics employed by a lot of traditional payment processors in how they apply their fees. Of course there are the set-up fees, the cancellation fees, the PCI non-compliance fees, and a host of other things your payment processor can charge you for seemingly on a whim, but what about the basic pricing structure of your agreement? Could that be the thing that is actually costing you the most?

    Traditional Payment Processor Pricing

    Most traditional payment processors use what is known as interchange differential pricing, which charges a merchant different fees per transaction based on which of those transactions are classified as "qualified" and "non-qualified". Oftentimes, payment processors would quote merchants the qualified rate to persuade them into signing a contract, but what went unsaid is that very few transactions actually end up "qualifying" for this more attractive rate, and the business owner was left paying more than they ever anticipated for the majority of their customers' purchases.

    Interchange differential pricing is similar to another form of pricing, called tiered pricing. Unfortunately, this method of pricing has few advantages for merchants besides being relatively easy to understand and it is widely regarded as an expensive and often unfair arrangement between merchant and provider.

    Not Better Left Unsaid

    Another reason you might be paying more than you had initially hoped for your processing services is that the company may have inserted some unfortunate terms into your contract without you noticing. When a payment processor includes a specific rate within their terms that seems too good to be true, it very likely is. And if you ever notice a fine print that reads something like "plus applicable fees" with no description of what those fees are or how much they could be, you should run as far away from that company as possible.

    A Better Alternative

    Now, imagine a payment processing company that isn't trying to pull the wool over your eyes, but uses a transparent pricing model and partners with you to help your business grow. Thankfully (at least in the payments world), unicorns do exist!

    Helcim's unique Interchange Plus pricing model may seem complex at first glance, but this method of processing payments comes with no hidden costs, and gives you the relationship you deserve to have with your service provider.

    Interchange Plus Pricing

    All card providers (like Visa, Mastercard, or Amex) charge a standard fee for every card transaction known as the interchange. However, these fees can change based on what type of card is being used by your customer and whether the transaction is being processed card present (in person) or card not present (e.g. online). For example, a basic cash-back Visa card may have a relatively low interchange fee, but something like an Avion card, which is considered a premium credit card, will typically be more expensive.

    How Interchange Plus pricing works for you as a merchant is you get to see exactly what the interchange rate is for every transaction you process. Helcim's margin, on the other hand, never increases based on the interchange rate, but remains a set amount. In fact, Helcim's fee only decreases the more transactions you process thanks to our volume discounts that are applied automatically!

    margin comparison between Helcim and competitors

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