Pricing payments: The ins and outs

Before you start identifying a pricing model or crunching the numbers on your payment pricing, it’s crucial to understand your users’ payment needs as this will help determine the value of your embedded payments offering against alternatives.

We recommend capturing insights for the following factors: 

The value of your offering 

Start by uncovering the payment features and functionalities your users highly value from your offering. This could range from saving time or costs to faster cash flow via instant payouts. An easy way to do this is to conduct a short survey with your existing user base to identify what your users value most when it comes to payments.

Understanding the user

The better your understanding of your user and their payment setup, the sharper you can price payments. Below are a few factors that can help guide you. We'll elaborate in the next section on how this plays a part in calculating your pricing.

  1. User vertical: Which vertical your user serves can influence payments pricing.

  2. User sales channel: Learn the volume split between card present (IPP), card not present (ECOM), and recurring transactions. The split of volume through each of these channels will impact the cost profile of processing payments.

  3. User type: Understand your user base type, e.g. SMBs, sole proprietors, or enterprise businesses.

  4. User geography: The payment mix of users’ country or region will influence your payments pricing.

  5. Debit vs. Credit vs. alternative payment method volumes: Find out the credit vs. debit card volume split of your users.

Tip: High debit or alternative payment method volumes could mean low international volume, while high credit volumes could mean high international volumes. More on this in the next section.

A combination of all these factors results in a range of pricing models across industries. Typically we see that platforms offer a Blend price when their users are SMBs, Sole Props and/or individuals. For some industries, enterprise users are likely to adopt an Interchange ++ pricing model.

Now, let’s get a better understanding of the nuances behind Interchange vs Blend pricing and determine how to calculate payments pricing.