Dharma Merchant Account Pricing

There are two primary pricing models used in the payment industry. We feel a deep responsibility in
explaining these models as a way to educate you on this very complex and confusing cost structure of
accepting card payments. It is highly unlikely that you will find this information on other providers’
websites.

Pricing Model 1: Interchange Pass Through
This program refers to the buy rates (Interchange) to which all Merchant Service Providers (MSP’s) are
subject by the Card Associations – Visa and MasterCard. The buy rates are set for each type of credit
card. In the credit card acquiring industry, there is no pricing advantage given to even the largest of
providers, which allows Dharma Merchant Services to have parity in the market. With this model, there is
a small constant margin added to each category of card type – like check cards, regular credit cards,
cards with rewards programs, business-issued cards, etc. For example, if a particular card type has an
Interchange rate of 1.70% (inclusive of dues and assessments by Visa/MC), and the merchant is
operating in a retail environment, Dharma MS would charge 1.90% - or 20 basis points over cost. There
is also a transaction fee that applies – also depending upon the environment – card present or
card-not-present. In this model, there could be dozens of categories represented on a merchant’s monthly
bankcard statement.

Pricing Model 2: Tiered Pricing
This program is based on aggregating all the many card types into just a few categories – typically
referred to as qualified, mid-qualified, and non-qualified rates. This has been the prevalent pricing
manner for most MSP’s in our industry, but has also been the source of the most deceptive and abused
practices. For example, it is quite common to find a qualified rate for ecommerce (card-not-present)
merchants of 1.99%, but that would only include debit card and non reward credit card sales, which could
be only a very small percentage of a merchant’s overall business. The non-qualified rate is often 4%
or higher! This is how merchants can get lulled into long term contracts with hefty fees for early
termination when they find out they’ve been taken by this “we give great rate” line.