System and method for assigning an initial transaction fee tier to a vendor in a payment system with a variable transaction fee

1. A system for making payments from a payer of a group of payers to a vendor of a group of vendors and assessing a transaction fee to the vendor, the system comprising:

in association with each payer of the group of payers, the following data stored in a non transient computer readable media:

a rate tier sub database identifying a transaction fee percentage applicable to each rate tier of a group of rate tiers;

a vendor sub database identifying each vendor in a subgroup of vendors to which the payer makes payment, the subgroup of vendors being fewer vendors than the community of vendors; and

within the vendor sub database, in association with each vendor of the subgroup of vendors, identification a selected rate tier assigned to the vendor, the selected rate tiers being one of the rate tiers of the group of rate tiers;

a rate tier assignment application, the rate tier assignment application comprising instructions stored in a non transient computer readable media and executed by a processor, for determining the selected rate tier for each vendor identified in the vendor sub database, the instructions comprising:

looking up an industry sensitivity score to assign to the vendor, the industry sensitivity score being a score value assigned to an industry in which the vendor participates and is representative of historical fee rates that have been accepted by other participants in the industry in which the vendor participates;

calculating an overall score for the vendor, the overall score being a function of at least the industry sensitive score assigned to the vendor;

looking up a selected rate tier associated with the overall score calculated for the vendor and writing the selected rate tier to the vendor sub database in association with the vendor;

a payment application for executing a payment from the a selected payer to a selected vendor, the payment application comprising instructions stored in a non transient computer readable media and executed by a processor, the instructions comprising:

looking up, in the vendor sub database associated with the selected payer, the selected rate tier associated with the selected vendor;

looking up, in the rate tier sub database, the transaction fee percentage associated with the selected rate tier associated with the selected vendor;

determining a transaction fee to apply to the payment, the transaction fee being a product of the amount of the payment multiplied by the transaction fee percentage associated with the selected rate tier associated with the selected vendor;

initiating payment to an account of the selected vendor a net amount equal to the payment less the transaction fee.

2. The system of claim 1 , wherein:

the data stored in the non transient computer readable media further includes a sensitivity score sub database, the sensitivity score sub database associating each of a group of industry codes with a sensitivity rating, the sensitivity rating being one of a group of discrete sensitivity rating values; and

looking up the industry sensitivity score to assign to the vendor comprises:

obtaining the vendor's industry code, the vendor's industry code being an industry code of the group of industry codes which identifies the industry in which the vendor participates;

looking up in the sensitivity score sub database, the industry sensitivity score associated with the vendor's industry code.

3. The system of claim 2 , wherein the instructions of the rate tier assignment application further:

determine a payer centric spend score for the vendor, the payer centric spend score being a function of the aggregate amount of all payments the selected payer expects to pay the vendor during a predetermined period;

determine a payer centric frequency score for the vendor, the payer centric frequency score being a function of the total quantity of payments the selected payer expects to pay the vendor during the predetermined period; and

the overall score is further a function of the payer centric spend score for the vendor and the payer centric frequency score for the vendor.

4. The system of claim 3 , wherein calculating the overall score comprises:

multiplying the industry sensitivity score for the vendor by a first weight factor to determine a weighted industry sensitivity score;

multiplying the payer centric spend score for the vendor by a second weight factor to determine a weighted payer centric spend score;

multiplying the payer centric frequency score for the vendor by a third weight factor to determine a weighted payer centric frequency score;

calculating the overall score as the average of the weighted industry sensitivity score, the weighted payer centric spend score, and the weighted payer centric frequency score.

5. The system of claim 3 , wherein the instructions of the rate tier assignment application further:

determine a network spend score for the vendor, the network spend score for the vendor being a function of the aggregate amount of all payments expected to be paid to the vendor by multiple payers within the group of payers during the predetermined period;

determine a network frequency score for the vendor, the network frequency score being a function of the total quantity of payments expected to be paid to the selected vendor by multiple payers within the group of payers during the predetermined period; and

wherein the overall score is further a function of the network spend score for the vendor and the network frequency score for the vendor.

6. The system of claim 5 , wherein calculating the overall score comprises:

multiplying the industry sensitivity score for the vendor by a first weight factor to determine a weighted industry sensitivity score;

multiplying the payer centric spend score for the vendor by a second weight factor to determine a weighted payer centric spend score;

multiplying the payer centric frequency score for the vendor by a third weight factor to determine a weighted payer centric frequency score;

multiplying the network spend score for the vendor by a fourth weight factor to determine a weighted network spend score;

multiplying the network frequency score for the vendor by a fifth weight factor to determine a weighted network frequency score; and

calculating the overall score as the average of the weighted industry sensitivity score, the weighted payer centric spend score, and the weighted payer centric frequency score, the weighted network spend score, and the weighted network frequency score.

7. The system of claim 2 , wherein the instructions of the rate tier assignment application further:

determine a network spend score for the vendor, the network spend score for the vendor being a function of the aggregate amount of all payments expected to be paid to the vendor by multiple payers within the group of payers during a predetermined period;

determine a network frequency score for the vendor, the network frequency score for the vendor being a function of the total quantity of payments expected to be paid to the vendor by multiple payers within the group of payers during the predetermined period; and

the overall score is further a function of the network spend score for the vendor and the network frequency score for the vendor.

8. The system of claim 7 , wherein calculating the overall score comprises:

multiplying the industry sensitivity score for the vendor by a first weight factor to determine a weighted industry sensitivity score;

multiplying the network spend score for the vendor by a second weight factor to determine a weighted network spend score;

multiplying the network frequency score by a third weight factor to determine a weighted network frequency score;

calculating the overall score as the average of the weighted industry sensitivity score, the weighted network spend score, and the weighted network frequency score.