What is the difference between tiered, blended and IC++ pricing?
Short answer
Blended pricing charges one rate for all cards. Tiered pricing sorts transactions into qualified, mid-qualified and non-qualified buckets, each with its own rate. IC++ pricing passes interchange and scheme fees through at cost and shows the provider’s markup separately, which makes it the most transparent of the three.
In detail
Tiered, blended and IC++ are three ways to quote a merchant discount rate. They differ in transparency and in who carries the risk of an expensive card mix.
The three models
- Blended: one rate for all cards, or one per broad category. The merchant gets predictability. The provider absorbs cost differences and prices that risk into the rate.
- Tiered: common in the United States. Transactions fall into qualified, mid-qualified and non-qualified buckets with rising rates. The provider decides the bucket, so the merchant cannot easily check the bill.
- IC++: interchange and scheme fees are passed through at cost, and the provider’s markup is shown on its own line. Costs vary from month to month, but every cent can be traced.
Which one to choose
Small merchants usually prefer blended rates. Larger ones ask for IC++. In the EEA, acquirers must offer unblended charges by default, unless the merchant asks in writing for a blended rate.
More in IC++ vs blended pricing and in What Is the Merchant Discount Rate (MDR)?.