Pricing Models & Programs

There are a host of pricing methods that acquirers implement.  Navigating these different methods can be complex and time consuming.

For example many smaller businesses choose to be set up with Tiered pricing.  Whereas other merchants, with a level of understanding of Interchange pricing, have elected to have Interchange Pass-through pricing. As you can imagine, there is no one-size-fits all solution and it is highly dependent upon your business strategy and resources.

Interchange “Pass-through Pricing – Mid-Sized to Large Companies

Often the best set up option, most large businesses are setup with Interchange pass-through pricing.  Interchange pass-through typically offers merchants a single markup on every transaction, regardless of Interchange category.  The merchant gets the lowest cost, regardless of where the transaction qualifies.  Interchange pass-through pricing assures a pass-through of cost.  Interchange pass-through can also help the merchant identify how their transactions are qualifying and determine if there is opportunity for qualification improvement.

Interchange Plus is a format in which the Interchange pass-through pricing that appears on reporting and statements varies by acquirer.   Often the Interchange, Assessments, and the Mark-up are reported separately on the Merchant’s statement.  This is often referred to as Interchange Plus.

Additionally, some acquirers bundle the Interchange and Mark-up together with the Assessments reported separately, referred to as Interchange Differential.  This bundled method is difficult for the merchant to analyze and recommended only for companies with sophisticated analytics capabilities.  Deciphering Interchange markups can be further complicated by the way the acquirer displays this pricing on statements and reports.

Tiered pricing – Small to Mid-Sized Companies

Tiered pricing involves a hierarchy of fixed rates that typically increase as transactions downgrade from Qualified to Mid-Qualified to Non-Qualified.  Tiered pricing involves the acquirer assigning pass-through Interchange categories to either the Qualified bucket, Mid-Qualified bucket or Non-Qualified bucket.   Then the acquirer determines a blended rate for each of the Tiers (buckets).

Many small merchants appreciate the simplicity of this Tiered pricing model.  In reality there are over 1,000 different pass-through Interchange rates that are bucketed into these Tiers.   Each acquirer independently and at their discretion determines which Interchange categories to assign to different Tiers, making it challenging for a small business to compare one acquirers Tiered pricing to that of another acquirer.


BillBack is a complex pricing model.  Companies are charged a flat percentage rate on all transactions regardless of card type.  You will see this on your current month’s statement.  You are then assessed the “billback” for all the transactions that downgraded to the higher interchange rates, such as rewards and business cards.  The billback actually appears on the next month’s statement.  The downside to this methodology is that it also carries a variable surcharge that makes it difficult to anticipate monthly expenses.  Enhanced BillBack is identical to the standard BillBack program, however, an additional fixed percentage markup is added.

There are any number of pricing methodologies an acquirer can implement and this is further complicated by limited industry standards.   NACCA is here to provide you with no obligation analysis of your merchant pricing and solutions.

Contact a NACCA representative to learn more 800-258-8472.