Pass-through vs. Flat Rate Pricing: Presenting the Best Options to Your Merchants

by Crystal Deese | Sep 19, 2022

“Why is my effective rate different this month versus last month?”

This is one of the most common concerns we hear from new merchants after their first few months of processing. Explaining the fundamentals of interchange to a merchant is no easy feat. When selling based on the effective rate, the pricing model used to pass the cost to the merchant is important. The two most common pricing models sold are pass-through pricing and flat rate pricing. How do these pricing models impact the effective rate, and how do you determine which pricing model works best for your merchant?

Pass-through vs. Flat Rate Pricing

Pass-through pricing

Pass-through pricing allows the true cost of processing to be passed on to the merchant. The benefit of pass-through pricing is transparency and lower costs. On a pass-through pricing model, merchant fees fluctuate monthly based on interchange and card brand fees. Interchange is determined based on card types, the merchant industry, transaction size, and other factors, such as reward cards that give you cash back and miles towards a consumer’s next vacation.

Common examples of factors that drive interchange costs are:

Rewards Cards – Interchange costs are higher to offset the cost of the rewards programs to the cardholder.
Keyed and e-commerce transactions – Without having the swiped and chipped data, the risk that the transaction could be fraudulent is greater and therefore, a higher risk. Address verification (AVS) helps mitigate the risk.
Debit Cards – Have the lowest interchange costs due to the lower risk. Debit transactions are funded directly from the cardholder’s bank account.
Average Ticket – Merchants with a lower average ticket qualify for interchange rates with reduced transaction fees, which lower costs.
Industry Types – Schools, government entities, utilities, etc., have special interchange pricing that can lower costs.

Flat Rate Pricing

Flat rate pricing is not designed to be competitive; it is meant to be easy to understand. A flat rate pricing model gives merchants a fixed percentage that is not impacted by the cost of interchange or card brand fees. Regardless of the types of cards accepted or any of the other factors that influence interchange costs, the merchant’s effective rate never changes. It is essential to remember since the merchant’s rate is fixed, flat rate pricing should be priced high enough to cover the cost of fluctuations in interchange rates. Recommended flat rates are currently ranging from 2.75% – 2.99%. The varying costs of interchange will affect the overall residuals earned on a monthly basis.

Pass-through Pricing	Flat Rate Pricing
Merchant cost is dependent on the interchange qualification.	Merchant cost is a fixed percentage.
Merchant effective rate fluctuates based on interchange qualification month over month.	Merchant effective rate remains the same regardless of interchange costs.
Partner earns a fixed residual percentage regardless of the underlying interchange.	Partner earnings fluctuate depending on interchange qualification.

So, what is the right choice?

Choosing between flat rate pricing and pass-through pricing isn’t always an easy decision;

However, with so many variables it can be comforting for merchants to know their processing fees will not change. As long as the sales and average ticket don’t fluctuate significantly month to month, the cost will remain relatively constant and predictable.For these reasons, when it comes to selling merchant’s on the effective rate, we have found the best pricing model to use is flat rate pricing.

Looking to learn more about Pass-through vs. Flat Rate Pricing

Fill out the form below and a BOLD representative will reach out to you

BOLD Supports We Help Merchants

by boldpay | Jan 11, 2021

WE HELP MERCHANTS

While on the brink of building a brand new business, Leith Danou found himself searching for a more efficient payment processor due to a lack of support. BOLD stepped in, adopted his company as one of their own, and helped in every way possible to set Leith and his team up for success.

For anybody looking to get in the industry or how to get started, and the go-to process, I can honestly say that BOLD has been phenomenal. With me, they have taken somebody who has zero merchant processing experience, completely held my hand through the process, and have gotten me to the point of potentially opening and doing sales.

— LEITH DANOU

THE BACKSTORY

Leith Danou, Principal CEO of We Help Merchants, spent years enamored with sales. He acquired his experience specifically in Real Estate, however, after a shift in the industry, he decided to embark on a brand new journey. Toward the end of 2019, Leith relocated to Las Vegas, Nevada, and kicked off We Help Merchants.

Previous to BOLD, Leith partnered with two other processors in hopes they would support his endeavors. Unfortunately, this wasn’t the case. Due to a lack of support, Leith began searching for additional options. That’s when he connected with Kelley Ganas, the VP of Business Development at BOLD He clearly explained what was most important to him, and Kelley and the team said they could provide what he was looking for. When asked about his initial impression of the team members that assisted him, Leith mentioned there were a number of different benefits. The BOLD Partner Relationship Management team was amazing, answered any questions he had, joined in brainstorming strategies, and were consistently supportive.

SEE A NEED, FILL A NEED.

Leith Danou |

For anybody looking to get in the industry or how to get started, and the go-to process, I can honestly say that BOLD has been phenomenal. With me, they have taken somebody who has zero merchant processing experience, completely held my hand through the process, and have gotten me to the point of potentially opening and doing sales.

Previously, I was not able to receive this level of support quickly and I felt like we were just a number. However, with BOLD, it’s totally different. It’s a “Hey, what do you need? Let’s talk about what you need and get comfortable, and then go out there and gain accounts one merchant at a time.”

ON THE HORIZON

While BOLD has proven to be reliable in supporting Leith and We Help Merchants on their venture thus far, the journey doesn’t stop there. Kelley, Nic, and Nichole partnered in laying the foundation and building the bridge, and are determined to continually pour into Leith’s future goals of officially launching the company.

Whether you have 25 years of experience or 2 months, BOLD is determined to listen to your needs, walk alongside you in the process, and help to build and grow your business.

Curious about all the facets to BOLD? We’d love to connect with you. Ring us at (877) 900-4511 or fill out the form below.

Korona POS Connects with BOLD

by boldpay | Jan 4, 2021

SUMMARY

The BOLD Marketing Team had a chance to converse with Till Freier, CEO of Combase, and his Marketing Manager, Michael Chalberg, to talk about the heart of their company and how they first connected with BOLD.

THE COMPANY HEARTBEAT

Combase first originated in Germany over 25 years ago, and has planted its roots all over the world; in Canada, Asia, The United States, and other various locations. For the past 10 years, the company has specifically concentrated around POS systems with their line, Korona POS. In the past, they have partnered with others processors, however, when Kelley Ganas, the VP of Business Development at BOLD, reached out, Till was intrigued by advantages that aligned perfectly with their company culture.

“Whenever we need additional discounts for sales, more details for products, or touch points for communicating with merchants, BOLD is our go-to. ”

— TILL FREIER, CEO

A TO Z COVERAGE

Till Freier |

The issue we came across with other processors, we didn’t know where our merchants were at during their application boarding. I wanted to streamline the process and really be able to tell a merchant from A to Z, “this is what you need, this is what you need to set up for, and we’ll take care of everything for you.” That was the biggest advantage for me that got me really interested in BOLD. It helps our sales flow and the experience we have with a customer.

Our experience with BOLD has been fantastic. We have gotten all the help we need for transition, especially for a company that’s new to signing people up for processing. Whenever we need additional discounts for sales, more details for products, or touch points for communicating with merchants, BOLD is our go-to.

EXCELLENCE CAN BE YOURS TOO

Till highlighted that the BOLD Support Team not only addressed any problems at hand and answered questions, but were confident and knowledgeable in their responses. It was personal and effective, rather than a monotonous interaction through a random call center.

Our Support Team is eager to learn more about how they can address your needs. Give BOLD a call at (877) 900-4511 or fill out the form below.

(Part III of III) How BOLD Partner, Gorilla Technologies, Found Success Offering Merchant Services

by Gary Liu | Sep 23, 2019

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The Complete Series

(Part I of III) How To Present Merchant Services to Your POS Prospects

(Part II of III) How To Present Merchant Services to Your POS Clients

The final part of our three part series will highlight a BOLD partner with a success rate of over 95% when it comes to signing their clients up for merchant processing.

Since 2014, Gorilla Technologies has delivered a suite of restaurant solutions including wifi marketing, failover internet, point-of-sale, and merchant processing. Over the years, Josh Carper, VP of Business Development, has crafted his message when introducing merchant services to his clients. “I learned early on that merchant processing is not a favorite discussion topic for business owners,” says Josh. “The research alone can be overwhelming for business owners, so I needed to change my strategy.”

Josh found success by signing his customers up for merchant processing when given the opportunity to build rapport over a topic they enjoy. He came to the realization that restaurant owners are much more excited to discuss the ROI and functionality of a POS system and less interested in any “savings” merchant processing can offer. With this in mind, he formulated a strategy that stands true today:

The Gorilla Tech Approach

“When first meeting with prospects, I rarely mention merchant processing before a meaningful

dialog about point-of-sale,” Josh says. “However, as the meeting is wrapping up, I casually mention credit cards to understand if they are still taking bids. Depending on their reaction, I leave it at that and allow POS to be our main focus over the next 3-4 weeks.” From that point forward, Josh makes sure to never be the first to bring up merchant processing. Rather, he spends his time building rapport and trust with the use of consultative selling.

As the end of the sales cycle nears and he moves closer to closing the deal on POS, he casually mentions merchant processing once again. At this stage, he has spent a good bit of time consulting the restaurant owner on all facets of their business. Many businesses owners look towards Josh for input on various items, and merchant processing is no different.

“I cover the benefits of accepting merchant processing through Gorilla Technologies, but I am never pushy about it. Even though our clients can use any processor, I make it clear that (1) it is much easier for us to support our merchant’s credit cards when they use our service. Not to mention, (2) the restaurant will only have one support number to call eliminating the ping ponging many businesses go through between the POS and merchant processing company.” Josh continues by saying “(3) The fix time is MUCH longer for my clients who use other processors because of the breakdown in communication between Gorilla Technologies and their processor. By using our service, our clients are guaranteed a much faster solution because of the direct relationship I have with the processor.”

Josh has found that many times his client is less worried about credit card rates are and more content knowing they are buying from someone they trust. He has built an extensive client base in the Atlanta market through the use of referrals and word of mouth. ”Trust is key. They buy my POS because they trust me, and merchant processing is no different.”

Bay Area POS Finds a Home with BOLD

by Chris Venza | Jun 6, 2019

SUMMARY

Founded in 2005 as an IT company offering technical solutions to local companies, Bay Area POS (BAPOS) transitioned to a POS company in 2009 and continued to expand their offerings to meet the evolving needs of their 500+ clients. BAPOS ultimately found a niche in offering POS solutions to restaurants. This shift and narrowed focus put them on track to become one of the fastest growing SoftTouch POS dealers in the nation.

THEIR SOLUTION

Critical to their success, BAPOS recognized and took advantage of a growing trend among restaurants regarding how they purchase point-of-sale systems. Restaurateurs want lower up-front cost and a modular system that can be customized to fit their unique needs.

“Ultimately, we chose SoftTouch POS as our main solution because it is a robust restaurant POS that is hard to beat” says Shane Jones, owner of Bay Area POS. “It offers a licensing structure that allows the merchant to buy it now or pay a monthly subscription that covers software updates and 24/7 support.”

Finding a customizable solution like SoftTouch POS was crucial in BAPOS’ success. Some of SoftTouch’s features include:

Dine In
Takeout/Express Menu
Table or Quick Service
Delivery
Caller ID
Drive Thru
Fast Bar Interface

Online Ordering
Mobile/Enterprise Reporting
Semi-integrated EMV Solutions
Pay-at-the-Table
Real-time Dashboard Reporting
Cash Discounting Integration
PCI-DSS Out-of-Scope

BAY AREA POS FINDS A HOME WITH BOLD

In addition, BAPOS recognized the benefits of offering merchant services as part of their solution and the resulting impact doing so has on their revenue stream. The difficulty lies in finding the right processor with the right support at the right revenue split.

“When we compared our residual splits with BOLD versus other processors we have used, BOLD’s payout was the closest to matching their Schedule A than the others.” says Shane. “Typically, other processors produce about a 50% or less split after fees. BOLD gives us the majority split of the revenue that is true to their Schedule A.”

But what is a lion’s share split without reporting to back it up?

Shane went on to mention “the [residual] reporting is also the best I have seen. You can see residuals at the transaction level.”

“After reviewing our payout with BOLD, it is our assessment that BOLD pays about 15-20% better than the other processors.”— SHANE JONES

Another area BOLD separates themselves from the competition is their partner and merchant support. BOLD takes a personal approach when supporting their partners and it shows.

“They always handle the problem same day and have the skills to adapt and supply temporary solutions or workarounds on the fly to offer continuity” says Shane. “No down time. They know the devices well.”

FUTURE PLANS

What does BAPOS plan for the future?

“Our main focus this year is cash discounting” says Shane. “We have great relationships with our clients, and providing a solution that can save them $50,000 a year in merchant processing fees is a no-brainer”.

BAPOS will expand their sub-agent channel with a focus on SoftTouch POS and merchant processing via their partnership with BOLD The plan for agents is a full assistance approach with a process that allows the agent to become acclimated with SoftTouch POS while earning residuals – all without forcing contracts or quotas on the agent.

Interested in becoming a Bay Area POS reseller? Email info@bayareapointofsale.com to find out more.