Tiered pricing can be quite problematic for merchants because even though it is designed to simplify transaction fees, it often results in higher costs and a lack of transparency. You may want to seek legal recourse if you own a business with a tiered pricing contract with a merchant payment processing company and discover hidden fees or feel misled by the unclear pricing structures.
Contact Sigal Law Group today for a free consultation. Our merchant processing litigators can help.
What is Tiered Pricing in Merchant Payment Processing Contracts?
Merchant processing companies use tiered pricing to determine the fees businesses pay for credit card transactions. This model categorizes transactions into three tiers, each with varying fee structures:
1. Qualified
2. Mid-qualified
3. Non-qualified
Transactions are grouped based on perceived risk and processing method. Usually, qualified transactions that involve card-present payments, like debit cards swiped in person, have the lowest fees because they are lower risk. Rewards cards or keyed-in payments usually fall under mid-qualified transactions and will have higher fees. Non-qualified transactions, on the other hand, are those transactions that involve high-risk or international cards. These have the highest fees because of the increased risk factors.
How a Merchant Processing Litigator Can Help
One of the biggest issues with tiered pricing is its vagueness. Payment processing companies can categorize transactions at their discretion, which can lead to inconsistent and unpredictable fees for the business owners. This lack of transparency makes it hard for businesses to understand their actual processing costs and compare offers from different payment processing providers. Moreover, tiered pricing can hide the actual interchange fees, allowing payment processors to impose hidden markups, which can significantly inflate processing costs.
This is why most businesses prefer interchange-plus pricing, which allows them to see their actual costs and negotiate better prices with their payment processing partners. If you feel you are being taken advantage of by your merchant payment processing company, you need help. The merchant processing litigators at the Sigal Law Group have years of experience helping businesses in similar situations. They will work tirelessly to help you protect your business. Contact Sigal Law Group today for a free consultation.
