Why Tiered Pricing is Bad

Tiered Pricing allows processors to hide their mark-up from you.

Tiered Pricing allows processors to hide their mark-up from you.

Tiered pricing is the most common rate plan, so — if you’re not sure what plan you’re on — there’s a good chance you’re on this one. Another way to know is if you’ve ever seen “Non-Qual” on your merchant statements.

If you do see terms on your statement like "Non-Qual", "Mid", "M-Qual", or "Non-Qualified" then you are on tiered pricing and will never be able to know the actual rate mark-up you are being charged.

With Tiered pricing, transactions are lumped into three categories: Qualified, Mid-Qualified and Non-Qualified. Transactions with low risk or low reward usually earn a Qualified rate, the lowest rate charged. Examples of this include in-person transactions when an EMV card is inserted using an EMV-ready terminal. With higher risk or greater reward (for instance, a keyed-in credit card transaction or business rewards card) the transaction downgrades to a higher-rate tier (to Mid-Qualified or Non-Qualified).

Tiered pricing isn’t regulated, so there isn’t a set threshold that triggers a different rate tier. Therefore, some providers that offer Tiered pricing are incentivized to let downgrades occur to boost their profits. So, processors that use Tiered pricing are free to make up their own rules as they go and because they are not regulated, they can make the statements so overly confusing that most people can't read them.

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