When the billing statement from your payment service provider says "less discount paid," does that mean you're getting a special deal? Not exactly.
While a discount usually refers to a percentage off your bill, credit card processing companies use this term to refer to fees you've already paid. This guide provides details about the "less discount paid" notation and answers common questions about payment pricing models for credit card transactions.
What Does 'Less Discount Paid' Mean?
The 'Less Discount Paid' notation on your payment processing statement refers to fees you've already paid. It's a credit applied to the total balance, reducing the amount you owe overall. Unlike the typical use of the term ‘discount,’ it doesn't mean the provider subtracted a percentage from your bill for promotional reasons.
Daily Discount vs. Monthly Discount
Some payment service providers charge their per-transaction fee before they deposit the funds into your small business account, a pay structure called daily discount. At the end of the month, you'll receive a bill for miscellaneous charges, including but not limited to non-qualified rates, mid rates, and transaction fees. The 'Less Discount Paid' label calls out fees you've already paid; it's not actually a discount, which explains some of the confusion around the term.
Daily discount has some downsides. This arrangement usually costs more than other pricing structures. It also counts credit card sales as net rather than gross deposits, which lowers your available cash flow.
What Are The Different Pricing Models Credit Card Processors Use?
Your credit card processor may use one of three common pricing models.
Flat rate pricing offers the most simple, affordable payment processing model for your small business. You'll pay the same fee for every transaction, so your bill will be transparent and easy to understand.
When you use Pay.com as your payment service provider, you’ll get access to a Pay Dashboard where you can view everything on one intuitive platform. We charge flat rates, so you'll know what to expect from every billing cycle.
Tiered pricing structures charge a different issuer fee for each credit card provider. Your rate changes for every transaction depending on the card your customer uses. You'll see the designations non-qualified (nqual), mid-qualified (mqual), and qualified (qual) on your bill to indicate the three pricing tiers.
Although tiered pricing is the most common model, it's also the most expensive for businesses. You may notice unexplained charges on your bill and difficult-to-understand statements.
Interchange Plus / Pass-Through Pricing
Providers that use pass-through plus or interchange plus pricing charge a set rate over the credit card company's established interchange rate. While the fee doesn't vary by card issuer, it may change based on the type of company you run or the volume of sales processed. However, even the most expensive interchange plus fees tend to be lower than tiered pricing costs.
It's easy to identify interchange plus pricing since it typically involves a detailed, itemized bill. You'll also notice a single flat discount rate.
The Benefits of Using Pay.com as Your Payment Service Provider
Pay.com takes pride in transparency. We make sure you understand your statement and charge a single flat rate for each transaction, eliminating stress over surprise fees. Other benefits of partnering with Pay.com include:
- Simple account setup with powerful tools for all your payment needs
- Multiple ways for your customers to pay
- The highest level of PCI DSS compliance to prevent data breaches, fraud, and identity theft
The Bottom Line
Credit card processing statements can be complicated, especially when your provider uses a tiered pricing model with daily discounts. In this situation, you may see a "less discount paid" note on your monthly bill. This term indicates a credit you're receiving for the daily transaction fees you've already paid.
You can eliminate unnecessary fees and reduce the expense of credit card processing by using Pay.com as your payment service provider. Our pricing model is based on a single per-transaction fee, with completely transparent real-time tracking through our Pay Dashboard.