Pricing
Harborline Payments must replace its one-size blended fee with a volume-tiered schedule as competitors publish interchange-plus rate cards.
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Harborline Payments is a US payment service provider for mid-market e-commerce merchants, processing cards, wallets and bank transfers through one integration. The company serves 1,850 merchants whose combined annual processing volume is $6.4 billion. Harborline's pricing has not changed in five years: every merchant pays a blended rate of 2.4% of transaction value plus $0.20 per transaction, all-inclusive, with no monthly fee.
Two forces are squeezing the model. First, a wave of competitors has moved to interchange-plus pricing with published rate cards, and Harborline's sales team reports that sophisticated buyers now benchmark effective rates line by line and treat a blended quote as a black box. Second, consumer behavior is shifting: installment products split larger baskets into four smaller payments, so the average ticket across the book is falling and transaction counts are rising faster than volume.
The CEO is weighing a redesigned schedule with volume-tiered rates and a higher per-item fee, sketched in Exhibit 2. Finance set one constraint: the redesign must not reduce revenue from the representative mid-size merchant by more than 2%, and it should grow take rate on the book over time. You advise the CEO on whether the proposed schedule meets the constraint, and how to position it.
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