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Interchange fees are set by Visa & Mastercard & paid to the customer's bank (issuing bank). These will vary depending on the type of credit card (consumer vs. premium) and how it is entered (in person vs manually keyed).Processors and Merchants of All Sizes are Bound by the Same Interchange!
The Key to Your Savings is all Buried in the "Plus"
Interchange-plus pricing is generally cheaper to accept than fixed pricing, especially for companies whose customers predominantly use debit card payments. Because the interchange and assessment fees are so much lower on debit cards, fixed flat rate pricing typically overcharges for these transactions, making IC Plus pricing is the way to go when possible!
Interchange plus pricing is a credit card processing pricing structure that separates the components of processing costs allowing for transparent reporting and interchange optimization often leading to lower costs when compared with other forms of pricing such as tiered or bundled. 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®.
The word "Plus" refers to the processor's markup that is applied to each credit card transaction. The markup is typically expressed as basis points (explained below) accompanied by an authorization fee. At IC Plus, the more you process on average basis annually, the less the plus!
A basis point is equal to 1/100th of a percentage point. A processor's markup is typically measured in basis points. However, any percentage-based fee can be expressed in basis points. For example, Visa's current interchange fee for a swiped consumer credit card is 1.54% plus a transaction fee of $0.10. Measured in basis points, this fee would be one hundred and fifty four basis points (1.54% = 154 basis points).
It is extremely important to look at the big picture when comparing credit card processors. If you simply focus on the basis point markup, the transaction fee, or another individual fee, you're setting yourself up for failure. What you really want to focus on is the effective rate for each quote.
Many factors such as business type, processing method, owner credit worthiness and others are used to determine the basis point markup that a processor offers. At IC Plus, we have over 20 years of industry experience in evaluating your business type, history, risk and what it takes to put you in the right pricing, platform and technology to minimize the transition!
Interchange plus pricing is still uncommon because it typically has the lowest margins for a processor. The processor passes the true Visa and Mastercard costs on to the merchant and charges only a single markup (%) on top of the processing volume. IC Plus offers our traditional merchants "interchange plus pricing" to provide transparent pricing for our valued clients.
Flat rate pricing typically has a flat percentage and a per transaction fee, regardless of the types of credit cards used or how they are entered. This is quickly becoming the most common pricing method for card processing as it is easy to understand, but can be quite costly to merchants. Companies like Paypal and Square utilize this type of pricing to simplify fees, but by creating this structure forces merchant to pay a premium!
Tiered pricing usually consists of having a lower "qualified" rate for certain transactions and higher "mid" and "non-qualified" rates for others. This is one of the most common pricing method with old-school processors, as they can entice merchants with a low "qualified" rate. Unfortunately they don't spend much time explaining the rest of their costly mid and non-qualified tiers that many cards end up clearing at.
Interchange Differential is another common pricing method among old-school processors. Similar to tiered pricing, "qualified" and "non-qualified" fees are charged, but merchants are also charged "interchange differential fees" on top of most cards. This results in merchants paying multiple fees on the same transaction, essentially being double billed.
Now that you understand that "Interchange Rates" are the same for all processors, it's time to look closer at what you are actually paying for every month to better understand your statement and true costs and effective rate.
At I.C. Plus, we provide transparent pricing, low "cost plus" processing to ensure you know exactly what you're paying for and why!
Ask Us for a Free, No Cost, No Obligation Analysis of Your Current Pricing to see how we can Save Your Thousands or Even Tens of Thousands of Dollars Per Year!
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