What Is Tiered Pricing in a Merchant Account?

Tiered pricing is a merchant account pricing model that groups credit and debit card transactions into pricing categories, or “tiers,” each with a different processing rate. Instead of seeing the exact interchange cost for every card type, transactions are bundled into broad tiers with fixed rates set by the processor.

This model is common but often lacks transparency, which can make it harder for merchants to understand their true processing costs.

How Tiered Pricing Works

In a tiered pricing model, every transaction is assigned to a tier based on factors like:

• Card type (debit, rewards, corporate, business)

• How the card is processed (swiped, dipped, keyed-in, or online)

• Risk level and data provided with the transaction

Each tier has a predetermined rate that includes interchange, card network fees, and processor markup.

Common Tiered Pricing Levels

Most tiered pricing structures include three main tiers:

Qualified Transactions

These are the lowest-cost transactions and typically include:

• Standard consumer debit or credit cards

• In-person, chip-enabled or swiped payments

• Transactions that meet all processor requirements

This tier is advertised with the lowest rate.

Mid-Qualified Transactions

These include:

• Rewards cards

• Card-not-present transactions

• Transactions missing some data elements

Rates are higher than qualified transactions.

Non-Qualified Transactions

These are the highest-cost transactions and may include:

• Business or corporate cards

• International cards

• Manually keyed transactions

• Higher-risk payments

These transactions often carry significantly higher rates.