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Which Credit Card Processing Fee Setup Makes The Most Sense For Your Clinic?

Updated: Jan 27

We get it. You didn’t get into the business of animal care to focus on credit card processing. The service is a necessary part of doing business – like a utility bill – but made a little worse by mystifying costs, salespeople offering you cheaper (and more confusing) rates, and terrible customer service. Bad news aside, we’re on a mission to make credit card processing transparent, elevate small businesses through fair practices, and improve your day-to-day operations with outstanding products. 

We hope as you jump into our blog more, you’ll notice a theme: You should know what you are paying for. 

In our last article, we shared a little about four major factors that influence the cost of processing a credit card. These are related to “interchange” or “wholesale costs” – the stuff that credit card processing companies should not touch (this cannot be underlined enough). This article moves on to help you combat predatory practices by understanding the differences between the three different rate structures. 

For the super-busy Owner-DVM or Practice Manager, here’s the quick answer: 

Cost Plus (or “Wholesale Plus”) = the wholesale price of processing credit cards plus the premium charged by processors to leverage their network to make this happen safely and securely. You can read every type of transaction on your statement. 

Flat Rate = A single flat rate (transaction fee + % of transaction) to process a card. It’s an easier statement to read. 

Tiered Rate = Different flat rates is applied to certain cards (ie. it’s cheaper to run a debit card), but figuring out which fees apply to which cards is very difficult. 

Of the three payment arrangements on offer, choosing between Cost Plus and Flat Rate are really down to your preferences, while a Tiered Rate is to be avoided (and if you have this one – it’s time to find a new processing provider). 

Got 5 minutes? Here’s the longer answer. 

When working with your existing Credit Card Processor (Merchant Services Provider), or you’re consulting with a new one, you will encounter three different fee structures. The choice between two – known as Cost Plus (or Interchange Plus) and Flat Rate structures – have distinct benefits and drawbacks, while the third – the dreaded “Tier Rate” – must be avoided for its lack of transparency and use in gouging practices by dishonest industry actors. In this article, we will walk you through each of these, explaining what they are and how your practice can stand to benefit. 

The Cost Plus Payment Structure

The name “cost plus” (or “interchange plus”) is characterized by charging the wholesale costs of credit card processing (fees paid to the card issuing banks and card brands) plus the “discount rate” and transaction fees charged separately by the credit card processor to enable you to process a credit card (this includes hardware, software, leveraging their payment network and secure storage). 


This is the most transparent pricing structure. You can see how much you’re paying and why. The processing statement features wholesale costs, the discount rate, and transaction fees. In addition, the cost-plus structure will fluctuate with wholesale costs, which could yield savings every month.


This amount of information can be overwhelming, and while it’s great when wholesale costs decrease, they may also increase from time to time. 

The Flat Rate Payment Structure

This payment structure was popularized by tech companies combining hardware, software and payment services such as Square and PayPal. The flat rate features one set pricing for swiped and not-swiped (or “keyed-in”) transactions that does not fluctuate. It combines the wholesale costs and processing fees combined in one price per transaction (usually between 2-3%). 

NEED TO KNOW: Be wary of promotional pricing at the onset of your arrangement with a merchant service provider. You may encounter exponential fee increases 6 to 12 months down the line. It’s a reason why many businesses switch every year. It’s also the reason why merchants stay with Gravity Payments five times longer than other processors.


The flat rate structure keeps things simple. Based on your transactions, you can easily calculate what you can expect to pay every month. Your statement will also be easy to read, and rewards higher margin products. In addition, you could stand to save money – wholesale costs from banks and card brands (Visa, Mastercard, Discover and Amex) fluctuate, and your merchant services provider will shoulder the burden. You should consider your product pricing before you opt for a fixed rate plan. 


The flat rate statement lacks some transparency – you don’t know what your wholesale rates are relative to the pricing paid to your credit card processor. Be wary of higher processing rates to account for fluctuations in wholesale costs. You might be paying more than you should. This issue is easy to combat however, by getting competitive bids from a variety of providers. 

The Tiered Rate Payment Structure

Imagine seeing an ad for a car brand promoting amazing lease prices for your favorite SUV. Thrilled, you run down to the dealership and the actual price is twice, three-times what they advertised. You inquire, and find out that the advertised price was specially qualified customers, or a specific hard-to-find model, or you could only drive the car a few thousand miles a year before encountering a gigantic surcharge. So you walk away. However, imagine if you’ve already signed for the car and then the monthly payments change without your knowledge. 

Welcome to the world tiered rate credit card processing. 

Tiered pricing combines all the fees into three different categories on your statement. The tiers indicate the pricing that will be applied to the type of card used in the transaction. Typically, a merchant services provider will use three tiers:

  • Qualified (with a low percentage fee)

  • Mid-Qualified (with a slightly higher percentage fee), and

  • Non-Qualified (with a high percentage fee).

Fees throughout these tiers range from 1.4% to almost 4% a transaction. 

This is all good so far, but it’s how providers use these tiers that makes this a highly predatory practice: in the majority of situations you will not know which card goes in which tier. As a result, your processing statement will be much higher than predicted, and you have no idea why. In addition, the advertised rates for these plans are often much lower than they will qualify you for. 


You have a quick, easy-to-read statement. 


You are highly vulnerable to gouging, and you do not know what you’re paying for. 

Our advice? Stay away from this pricing structure at all costs. 

Want to learn how to read a credit card statement? Check out this handy guide! 

That’s all, folks! We recommend transparency above all else – that’s why our “cost plus” structure is so popular among veterinary professionals. For better merchant services provider, get in touch and experience our consultative approach and customer service. We’ll let you know if you’re in the best spot, or could do better. You can reach out to our Veterinary Specialists here. 

DVM Elite members contact your Practice Strategist about your special Gravity Payments discount offer or click here!

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