Cloudbeds Payments - Cost+ Versus Blended Rate Pricing

This guide explains the two pricing models offered by Cloudbeds Payments: Cost+ (also known as Interchange Plus) and Blended Rate Pricing. These models determine how you are charged for processing payments.

• Cost+ (Interchange Plus/IC++): A transparent, per-transaction model where you pay the actual processing costs (interchange and card network fees) plus a fixed markup from Cloudbeds.
• Blended Rate: A simplified, fixed rate per card category, combining all fees into one percentage.

Understanding Cost+ Pricing

Cost+ pricing reflects the actual costs associated with each transaction plus a small, fixed markup from Cloudbeds (for example, 1.2%).

• Interchange fees: These are charged by the card-issuing banks (e.g., Chase).
• Card network fees: These are charged by credit card networks (e.g., Visa, Mastercard, Amex).
• Transaction-based variables: Fees can differ based on factors like the card type (basic, rewards, travel), the country where the card was issued, and whether the transaction is domestic or international.
• With Cost+, every transaction has its own specific fee, providing maximum transparency.

Understanding Blended Rate Pricing

Blended rate pricing combines all these varying fees into a single, fixed rate per card category. This simplifies billing as you pay a consistent percentage fee regardless of the specific card-level variations within that category. Examples of categories include domestic standard cards, international cards, and Amex cards.

Fees Included in Each Model

Difference between the Cost+ and blended rate pricing

The passthrough costs differ based on card type, card owner country, card presented country, and more. Here are some examples of card attributes, all of which can incur different fees:

• Basic card, rewards card, travel card
• Country location of each of the above card types
• Where transaction takes place if card presents as domestic versus international 
• Virtual credit cards (VCCs)
• Card brand of all of the above

Each card brand has its interchange fee schedule, ranging from <1% to 5+%. These fees are per transaction, and each transaction can have a different passthrough cost. On top of the passthrough costs, processors add their markup,  usually a fixed percentage rate. Examples are provided below.

A blended rate combines all these fees into one fixed rate. This means you pay one rate per card type (brand, domestic/international) instead of a different fee for each transaction type, which takes card type, bank, customer, location, and more into consideration.

If the Cost+ model is cost + 1.2% and the blended rate is 2.9% (domestic) and 3.9% (international), here are costs for different cards under the two pricing models:

These examples are for illustrative purposes only.

Pros and cons of Cost+?

The benefit depends on the guest mix and card mix. Generally, blended rates are better for merchants who prefer simply reconciling their fee expenses. Cost+ is a more transparent model, where the properties can see the markup separate from the passthrough fees. Cost+ can be more cost effective for customers with high processing volumes who understand their specific customer card breakdown.

To sum it all up, here is how you can think of the two pricing models using the above hypothetical rates:

• Cost+: Variable passthrough rates of <1% to >5% + 1.2% markup per transaction
• Blended: Your rates are 2.9% and 30 Cents for Standard Cards | +1% for Specialty / International Cards*

Note: All transactions also include a fixed fee and the transaction percentage rate. For example, transaction rate (Cost+ or blended) and $0.30** would be charged per transaction.

Example of how and when the Cost + fees are charged

Let's say the fee is cost+1.2%+0.35 EUR. When a transaction happens, we use a set rate (like 2.4%) to estimate what cost+1.2%+0.35 EUR might be. Then, at the start of the next month, Cloudbeds compares the actual cost of +1.2%+0.35 EUR to this estimated rate. Depending on the difference, Cloudbeds will either add or subtract that amount from your account.

In this section of the monthly statements, you can find the reconciliation:

Pass-thru Fees + Cloudbeds Facilitation Fees = Fees Subtotal
Fees Subtotal - Fees Paid = Fees Owed

Below, you can see the monthly statements and how the Cloudbeds facilitation fees are calculated:

*Examples only. Each blended rate varies by region.
**Fixed rate varies by region.