Frequently asked payment processing questions

We know pricing in payments can be complex. We’re here to help you understand how it works and give you the tools to get the right pricing from your payment processor. Hopefully we’ll be your payment processor.

Qualified rates are for qualified transactions, which are generally referred to card present transactions. “Card present” really means that you physically saw the card.

The non-qualified rate applies transactions with most internationally-issued cards, corporate, and rewards credit cards. There are also specialized transactions like eCommerce and over the phone (AVS), that fall into non-qualified rates. Read more

Banks charge flat fees for transactions along with the interchange rate. The percentage and flat fee depend on the type of card, type of business and how the transaction is processed. For processors, flat transactions fees particularly fund low dollar amount transactions because the percentage fee would be too low cost.
The international fee is charged for transactions from credit cards that are from out of your home country. These are sometimes called “cross-border fees” or “international acquirer service fees”. This fee is an additional 0.5% to 1.25% of the transaction amount.
Clearly Payments does not have monthly fees, which are flat fees charged monthly, like $30 per month no matter whether you process anything. However, Clearly Payments does have monthly costs to our business and we need to cover those costs. The way we cover the cost is with a monthly minimum fee. Monthly minimum fee is how much is charged to you if your business does zero transactions to keep the account open. As you do transactions over the month, your percentage rate and transaction fees build up. Once you hit the monthly minimum in your fees, you will not be paying a monthly fee. This is why we believe monthly minimums are better for customers than monthly fees, which many processors charge.

Here’s an example: if you process $1,000 in credit card sales over a month, and let’s say your credit card fees totalled $22.20 for that period. If your monthly minimum is set to $25, you would be charged $2.80 ($25.00 – $22.20) for the month. That’s much better than a flat rate of $25/mo. In general, monthly minimums are achieved with around $2000 in credit card sales.
American Express (AMEX) sets their own rates and based on region, industry and volume. AMEX also only reveals their rates directly to merchants via the phone. Businesses that have very little in credit card sales would pay around $8 monthly fee. Higher volume merchants will be charged a flat rate (i.e. 3%) or a rate and flat fee (i.e. 2.89% + $.15).
Interchange plus (aka “cost plus”) pricing is a straightforward way to price. If you have cost plus pricing, it is more transparent because it is much more difficult to have hidden fees. In cost plus pricing, processors take all the bank fees, card brand fees etc, pass them straight through to the merchant, then add a markup (i.e 20%) for their fees. So, if you were being charged 20% using interchange pricing, you would say, I am being charged “cost plus 20”, which in general is a pretty good deal. You can check out all the interchange rates as they are published by Visa and MasterCard.

Clearly Payments primarily uses cost plus pricing. Overall, the best way to tell what you are being charged is to take all your fees and divide that by how much you processed in credit card sales. This is known as your effective rate.
When you charge a card at your business, there are two fees added on to the charge that you have to pay. There are interchange fees, which are set by the card companies (like Visa and Mastercard) and cannot be adjusted. Then, there are the processing fees. Traditional merchant service providers make money by charging an additional percentage on top of the card interchange fees.

At Clearly Payments, we offer a membership pricing model, so you pay a flat fee every month for all of your credit card processing. You’ll always know what you’re paying. It’s predictable and clear.

With our membership (subscription) plans, every subscription gives you a membership that provides access to the direct cost of interchange, no hidden fees and no markups.
There are a couple of reasons. First, there are several different ways processors price: flat rates, interchange plus, tiered. Here’s a quick explanation of each:

Flat rate: you get a fixed percentage and fixed transaction fee for all transactions (i.e. 2.7% and $0.15 per transaction). This is the simplest to understand and predict. Interchange plus (also called cost plus): you get a fixed markup on the wholesale costs (i.e. 0.3%, or 30 basis points, fee on all wholesale costs). This is the most transparent as long as there are no hidden fees.

Tiered: you get different rates for different types of cards and transaction methods. This is the most common and also complex to understand. If you know your stuff, you can use tiered to customize your rates to benefit your business. The different pricing methods is one reason why it’s difficult to compare. It’s not always clear which one is being used. Secondly, many processors either don’t explain or hide certain fees. Unfortunately this is quite common in the payment industry. That’s why it is best to find a processor you trust.