Earn a percentage for every transaction
Our Open Source Agency Model is build for Web Agencies, who design eCommerce sites and who wants to improve their relationship with the merchant, while silently earning a percentage for every transaction.
Gain the profit that is often forgotten
Most agencies don’t care about payments – it is complex, and somebody else have already fixed it. Well, there is an profit of often 1.3% going to someone else, on your customer.
We have tried, with our Startup Program above, to share that profit with you.
|Our Revenue split
|The Acquirer markup
|The Scheme fee
The calculation of interchange, and the revenue split
Understand the cost of a transaction is a key metric for any Payment Gateway – and any Agency who wish to have a revenue-stream based on it. Each payment method have their own costs. For card payments, one of the most significant and most well known is the so-called “interchange fee”. To our knowledge, most merchants don’t have a clear view of what it is, who charges it and how much it actually cost of the transaction. It have driven through business models with an so-called Blended Rate, where the merchant have a fixed fee, no matter the underlaying costs.
Blended Rate -> Interchange?
Our Agency Model, described above, counts as an blended Rate. Ther merchant knows their cost, but your profit increase (or decrease) based on which card type the consumer uses.
The cheapest transactions, is Debit-cards, while Credit-Cards counts as more costful.’
Pros and Cons of selling as the Blended Rate and purchasing as Interchange++
An overall advantage of blended rate is that is it is easier to explain and it’s easier for Merchants to understand, as fewer variables are involved within the pricing model. However, the pricing model isn’t transparent, which makes it easier for acquiring banks and Payment Gateways (or Agencies) to conflate fees to increase the profit.
With a blended pricing model, merchants are charged a gateway fee, which is a fixed fee, and a percentage fee of 1.4%. The percentage fee encompasses the interchange cost, the scheme cost, and the acquirer’s mark up. Merchants are however unable to see the split – and unable to see how much your profit is.
The following are the pros and cons of using a blended pricing model:
You can easily sell the pricing model, and your customer can understand it in less than 1 minute. It is straight forward, and it combines all processing costs into one single price. You do not need to be fully transparant into the actual hard costs you accrued, but you safely estimate what the merchant have to pay in transaction costs for a given level of sales.
- Offset High Interchange Rates
The blended rate can for the merchant be a good fit if the products have a high average ticket value and have a large percentage of AMEX, Diners or reward and card sales. These conditions can often create higher interchange rates, so a blended rate cost may end up cheaper than the transaction cost, in which case you as the Agency must review whenever the pricing shall be increased, or you accept the loss on few transactions – to make the funds on other. But don’t worry, we are already taking care of the pricing review, and let you know if there is anything to discuss in that matter.
- Good for smaller businesses
Smaller businesses do generally not have the time nor resources to investigate, review and reconcile the processing statements, interchange rates or review if the blended rates is a fair solution.
As the blended rate is a simple and easy solution, most small businesses prefer it – well knowing they might be able to get it slightly cheaper, if they wish to invest several hours per month reviewing it.
- Easy to understand
Your customer don’t need to spend hours and hours understand the pricing scheme. We are, In the Merchant Portal, showing the actual cost per transaction, and shows what is being paid out – and when we expect it to be settled.
- No transparency
A typical credit card interchange rate in Europe is capped at 0.30%, while it in China is 0.35% and Australia is 0.50%. For the rest of the world, the rate average at 1.83%.
The debit card rate can range from 0.05% to 0.60%. In Europe a larger percentage of the consumers are using debit cards, which makes you as an Agency making anywhere between 0.5%-1.6%, per transaction of the 1.4-2.4% rate the merchant is being charged. (1.4% in EU, 2.4% outside EU)
- Limited flexibility
When offering blended pricing, it may start with a standard price per transaction. Then, to obtain further rates, the merchant will have to achieve an high volume of sales.
- Hidden fees
There can be, and is on some gateways PCI compliance fees and setup-costs buried in the contracts. However, we do not work with that kind of costs.
We are only working with a processing fee, and potentially a monthly gateway fee.