Flat Rate or Enhanced Billback Pricing

Flat Rate / Enhanced Billback

Flat Rate / Enhanced Billback pricing is probably the hardest form of pricing to understand. That would seem to be counter-intuitive, but it's true. Since all plans are subject to the same interchange rates and fees, the flat rate plan is designed to mask the true fees and make it harder for the merchant to compare counter proposals.

Interchange discount rates vary by card types and processing mode, and can range from 0.05% + $0.22 per transaction on the current non-exempt bank debit card transaction, to the mid 3's for some of the newer rewards cards. So trying to cover all the various card types with one, or two, flat rates is basically a marketing gimmick.

Like Tiered Pricing, this form of pricing doesn't automatically "pass through" any rate changes to the interchange fee, and thus is adjusted periodically to account for interchange fee adjustments. If rates drop, as they did on October 1, 2011 for debit card transactions, the savings are not realized by the merchant, only by the processor.

Changing a merchant to "Interchange Pass-Through" can lower the net rate by as much as 25% or more.

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