STANDARD PRICING PROGRAMS

There are multiple interchange plus pricing options to consider and SalesHEAD is here to ensure you understand your options!

Learn about interchange pricing below and the various formats you can choose.

UNDERSTANDING INTERCHANGE RATES

Interchange Plus is the term used to describe a merchant account pricing model where a fixed markup is applied directly to interchange fees published by Visa, Mastercard, and Discover.

Interchange fees represent the largest portion of card processing fees and are set by card issuers such as Bank of America, Capital One, Chase, Citi, Synchrony and Wells Fargo to name a few. Every credit and debit card issued carries a specific interchange fee that you, the merchant business accepting the card, must pay.

Interchange is the wholesale cost of accepting card payments, which includes a percentage charge and a per transaction fee.

In addition to interchange costs, business owners must also pay the card processing companies who authorize the transactions and move money between your customers account and your bank account. This is the “Plus” part of the pricing model. And be sure to understand the other various account fees your processor may impose.

HOW YOU ACCEPT PAYMENTS AFFECTS INTERCHANGE COSTS

Another factor affecting interchange fees involves how you accept cards. How the card is accepted directly reflects the amount of risk related to card fraud. As a result, interchange rates vary based on how the card is accepted. See more below.

Card Present Transactions

Your customer brings in their card and you swipe, dip or tap the card to collect payment at your place of business.

Least risk and lowest interchange rates.

Mail Order/Phone Payments

Customer submits their card information by mail or provide it over the phone at the time of the sale. Example: Take-Out Order

Moderate risk and higher interchange rates.

STANDARD INTERCHANGE PRICING OPTIONS

Online Transactions

Online purchases represent the largest risk of fraud for your business. Keep your online transaction ticket amount as low as possible.

Highest risk and highest interchange rates.

What is Interchange?

  • Flat rate pricing is the simplest pricing format to understand and refers to a single % rate applied to all debit and credit cards used by your customers plus a per transaction fee.

    Our flat rate, for example is:

    2.75% and $0.10 per transaction

  • Tiered pricing is a bit more complex as it contains up to about five various rates, one rate for each card type. Card types include: Signature Debit, Pin Debit, Qualified Credit, Mid-Qualified Credit and Non-Qualified Credit.

    Although harder to grasp, tiered pricing can be less expensive if your customer’s tend to use specific types of cards.

  • Interchange plus pricing tends to be the least expensive of the standard pricing options and also provides more transparency in most cases.

    Think of interchange plus pricing as a “cost plus” program. Interchange fees issued by the card brands are passed through to the business directly. The merchant processing fees are indicated by the ‘plus’.

    One complication, however, is that the plus is expressed in basis points, not as a simple percentage.

    For example, a price quote for interchange plus pricing could be state as: Interchange plus .5 basis points. To get to the %, you would divide the .5 by 100 giving you .005 or 1/2%.

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