TransFreedom flat fee credit card processing rate review

It’s nice for budgeting, but is it a good deal? TransFreedom by TransFirst offers merchants a simple way to budget credit card processing expenses by offering a flat monthly fee for everything. It’s the same rate as long as merchants do not exceed their monthly tier.

Prelude: All credit and debit cards have associated interchange fees. How the merchant pays for them varies widely. The processor can bundle all the fees and keep the difference between actual cost and the bundled rate sold for. Or the processor can ‘pass through’ all the fees and add a merchant discount on top. Bundled rates:

  • The payment processor is obligated to pay interchange fees, regardless of what your price plan looks like.
  • The processor uses industry experience to calculate what the average effective rate is (sum of all fees divided by net business volume) for different types of business (professional services, hair salon, manufacturer, etc) and payment acceptance methods (online, retail etc).
  • The processor offers you a bundled rate they are reasonably sure you will exceed, typically adding a nice cushion on top just to be safe.

TransFreedom One Price Plan Pros:

  • Merchants can budget for fees as a monthly operating expense
  • Includes the TransFirst Gateway
  • Includes data breach security protection policy
  • Merchants don’t need to learn anything about interchange or qualifying transactions for better rates.
  • Addresses an issue for small businesses with low volume: eliminating the need to understand complex credit card procssing fees.

TransFreedom One Price Plan Cons:

  • Merchants pay for volume even if they don’t use it, causing a wide swing in the effective rate:
    • $15,000 for $449= 2.99%.
    • $11,000 for $449= 4.08%
    • Rarely do merchants have the same volume month to month.
  • Restrictions do apply, but they are not listed for public viewing. Most likely international card surcharge fees will apply. Also, since the effective rates vary widely by industry, if you’re in a higher fee industry (business to business) rates may be higher.

Blog Author Speedy says:

  • Comparing apples to apples for a specific tier revenue amount, a merchant could conceivably save with Transfreedom. It all depends on the merchant deal. Regardless, since a merchant pays for unused volume, or 4% for going over the volume, this plan is not for merchants counting pennies.
  • Choose this plan if you want a fixed price, lowest cost is not an objective, and you’re comfortable with the 3-year term that is standard for Transfirst merchant agreements. Additionally, be sure to read the fine print about ‘restrictions’ before committing.
  • One of the biggest problems for businesses is ‘qualifying’ for lower interchange rates. Rather than change processors, merchants can fix the problem with CenPOS the industry’s only intelligent payment gateway- universally works with all credit card processors, for retail, MOTO, mobile, online etc. to qualify ALL transactions at the lowest rates possible. Contact Christine Speedy for more information.

DISCLAIMER: This review uses publicly available information posted on the TransFreedom web site as of 5/25/2012. The review does not include the processor, just the price plan.