How the three buckets work
Tiered pricing puts each card sale into one of a few buckets, and each bucket has its own rate. Helcim’s guide describes it this way: “Tiered pricing usually consists of having a lower ‘qualified’ rate for certain transactions and higher ‘mid’ and ‘non-qualified’ rates for others.”
| Bucket | What it is |
|---|---|
| Qualified | A lower rate, for the sales the processor treats as qualified |
| Mid-qualified | A higher rate |
| Non-qualified | A higher rate again |
Helcim’s guide says the qualified rate “usually only applies to very select few types of cards”. Helcim sells interchange plus pricing, so this is one provider’s description of another model.
A published tiered rate card, with each bucket’s rate and the rules for each, was not found on the provider pages we could open.
Where the word “qualified” comes from
The card networks use the same word for interchange, the fee the processor pays to the customer’s bank.
- Visa Canada’s rate sheet says: “There are specific technical and other criteria that each transaction must meet in order to qualify for the different rate categories.” Its Standard rate is “The default interchange rate”, which “applies to transactions that do not qualify for any other rate program. Typically these transactions are card not present.” For a Classic card, Standard is 1.45%, versus 1.25% in person (“Electronic”).
- Visa’s US rate sheet lists a “Non-Qualified Consumer Credit” rate of 3.15% + $0.10.
Network rate sheets have many categories. A tiered plan groups sales into a few buckets of its own. The processor’s agreement sets which sales land in which bucket.
More: What Is Interchange?
Who decides which bucket a sale goes in
The processor sets the rules in its agreement. Card network rules decide only which interchange category a sale meets, as described on their rate sheets.
Questions a processor can answer:
- Which cards and kinds of sale go in each bucket?
- What are the mid-qualified and non-qualified rates?
- Are there per-sale fees on top of the bucket rates?
The Canadian differential model
Helcim’s guide says “Interchange Differential is common for Canadian processors.” TD’s statement guides show two versions:
- DRAF. Each card brand has an applicable rate. Card types with higher interchange get a “DISCOUNT RATE ADJUSTMENT FEE”: the interchange differential plus a rate adjustment fee, times the sales amount. It applies only to card types where the differential is more than zero.
- Simplified. TD’s sample shows lines such as “VISA NON-ELEC STANDARD RATE” at 0.20%, an extra charge on certain sales.
See Flat Rate vs Interchange Plus vs Tiered.
The quoted rate and the rate on your statement
On a tiered plan, a quote may show the qualified rate. The statement shows what each bucket charged.
Working out your effective rate
The effective rate is total fees divided by total card sales. It works the same way on every pricing model, so it puts a tiered statement in the same terms as a flat-rate or interchange plus one. The effective rate calculator does the maths.
Some providers publish other models instead. Stripe’s standard pricing in Canada is flat rate, with “IC+ pricing” offered on custom plans. See Stripe, Helcim and Square.
Where to go from here
A tiered statement usually names the buckets: “qualified”, “mid-qualified” and “non-qualified”. How to Read Your Merchant Statement shows where the fee lines sit, and the statement decoder explains common line names.
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