Did You Know? Pay As You Go Processing Can Cost More Than You Think

For some businesses, that kind of pricing may feel easy and convenient. But easy does not always mean less expensive.

One of the biggest mistakes business owners can make is choosing a payment processing option based only on the promise of no monthly fee. While that may sound like a savings, the cost can show up somewhere else, usually in the rate you pay on each transaction.

At TMC, we believe business owners deserve to understand the difference between simple pricing and strategic pricing.

Because the cheapest looking option is not always the option that saves you the most.

Did You Know No Monthly Fee Does Not Always Mean Lower Cost?

Many pay as you go or flat rate processors promote the idea that you only pay when you use the service.

That can sound great, especially for a new business, a seasonal business, or a business with lower card volume.

But here is the part many business owners do not realize.

If there is no monthly fee, the processor may be building their profit into the transaction rate instead.

That means you may be paying a higher percentage every time a customer uses a card.

For a business that only processes a few payments here and there, this may not feel like a big deal. But as sales grow, that higher rate can start to cost more than a pricing model with a small monthly fee and lower transaction costs.

Did You Know Flat Rate Pricing Can Hide The True Cost Of Different Card Types?

Flat rate pricing is popular because it is easy to understand.

You may see one simple rate for in person transactions and another rate for keyed or online transactions.

Simple can be helpful.

But simple can also hide important details.

Not all cards cost the same to process. Debit cards, rewards cards, corporate cards, manually keyed cards, online payments, and card present transactions may all carry different underlying costs.

With flat rate pricing, those differences are often blended into one rate.

That means a merchant who accepts a lot of lower cost debit cards may still be paying a higher blended rate because the pricing model does not pass along those lower costs in a clear way.

For some businesses, flat rate is fine.

For others, it may cost more than needed.

Did You Know Interchange Plus Pricing Can Be More Transparent?

Interchange plus pricing is a different kind of pricing model.

Instead of blending everything into one simple rate, interchange plus separates the actual card cost from the processor markup.

Interchange is the cost set by the card networks and issuing banks. The plus is the processor markup.

This model can give business owners a clearer view of what they are paying and why.

It may include a monthly fee, but that does not automatically make it more expensive. In many cases, especially for businesses with steady or growing processing volume, paying a reasonable monthly fee along with a more transparent rate structure can be more cost effective than paying a higher flat rate on every sale.

The important thing is not whether a plan has a monthly fee.

The important thing is the total cost.

Did You Know A Monthly Fee Can Sometimes Save You Money?

This is where processing can feel a little backwards.

Many business owners see a monthly fee and immediately think it is bad.

But a monthly fee is not always the problem.

Sometimes, a monthly fee helps support a pricing model that gives the merchant access to lower transaction costs, better support, clearer reporting, or tools that help the business operate more efficiently.

For example, a business that processes a higher volume of card payments may save more with interchange plus pricing, even with a monthly fee, than they would with a pay as you go processor charging a higher flat percentage on every transaction.

That is why it is so important to look beyond the monthly fee and ask:

• What is my total monthly processing cost?
• What am I paying per transaction?
• What types of cards do my customers usually use?
• How much am I processing each month?
• Do I need support, equipment, invoicing, recurring payments, or text to pay options?

The right answer depends on your business.

Did You Know The Best Pricing Model Depends On How Your Business Operates?

There is no one size fits all answer in credit card processing.

A brand new business with very low volume may have different needs than a busy retail store, restaurant, service provider, medical office, or contractor.

A business that accepts mostly small debit transactions may need a different setup than a business that accepts large invoices, recurring payments, or higher ticket sales.

That is why it is important to review your processing setup as your business changes.

What made sense when you first opened may not be the best fit now.

If your sales have grown, your average ticket has changed, or you are accepting payments in new ways, it may be time to review your pricing model.

The Bottom Line

Did you know pay as you go processing can cost more than you think?

No monthly fee can sound appealing, but it does not always mean you are saving money.

Sometimes the higher cost is hidden inside the transaction rate.

The best way to protect your business is to look at the full picture. Compare your total cost, understand your pricing model, and make sure your processor is helping you choose the setup that fits your business today.

At TMC, we believe processing should be clear, honest, and built around the way your business actually works.

Because when you understand how you are being charged, you can make better decisions, protect your bottom line, and feel more confident every time you accept a payment.

Review your Rates

Use our rate calculator to figure out what your effective rate is. Credit card processing fees can impact a business’s bottom line. By reducing these fees, businesses can improve their profitability. Contact our team for a FREE statement review. We typically see a savings of 25% or more!

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