Interchange Plus Pricing

Interchange is the rates set by the credit card companies themselves. Every card has a different rate associated with it and can vary from 0.05% to 3.1%. Everyone has to pay interchange regardless of size or volume.

With interchange plus, you pay a flexible percentage based on two factors: The type of card processed ,and how it was processed.

For example, business credit cards typically have higher interchange rates than personal credit cards, and swiped or card-present transactions usually have lower interchange rates than card-not-present transactions.

Interchange-plus pricing basically breaks down the charges going to the issuing bank and credit card associations, allowing you to see the markup they’re charging you for processing your transaction. This is a much more transparent pricing model, but it also makes your statements harder to read. In most cases, that will be a small price to pay, as interchange-plus pricing rates are usually lower overall than tiered rates.

While the actual numbers can get pretty complex, at its core interchange-plus pricing is quite simple. This pricing model consists of two elements: an “interchange” and a “plus.” The interchange is the percentage of the transaction that must be paid to both the issuing bank and the credit card association. Because your processor has to pay this charge, they’ll pass it on to you. The plus is the amount over and above the interchange costs that you pay the processor. It’s their markup for processing your transaction, and it’s designed to cover their costs of doing business.

Interchange-plus pricing is sometimes referred to by alternate names, such as interchange pass through pricing or cost-plus pricing. These different terms all refer to the same thing.

EnrollPay currently charges interchange + .6% + $0.15 per transaction for this option.

* Other fees do apply (e.g. Standard Monthly Regulatory, Gateway Access, Annual PCI Compliance).

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So, how much will the interchange cost you?

These fees are set directly by the credit card associations, and they can get pretty complicated. There are different rates for debit and credit cards, for example, as well as different rates for different types of credit cards. Card-present and card-not-present transactions also have different rates, as they reflect the level of risk the issuing bank is taking in extending credit for a given transaction. If you really want to dig deeper into the subject, official rate information from Visa and MasterCard is also available online but here is an example of how this all works in practice:

You own a retail store and have a merchant account with EnrollPay. A customer comes in and purchases an item for $100.00 (including tax). He pays with a Mastercard Consumer credit card. The interchange cost is 1.580% + $0.10, or $1.68. EnrollPay passes this cost to you, plus they charge a markup of 0.6% + $0.05, or $0.65. Your total cost for taking the credit card is $2.33, or 2.33%.

How Will Interchange-Plus Pricing Save Me Money?

The fundamental flaw with the traditional flat rate pricing model is that it hides the interchange costs and allows processing companies to charge more of a markup. While this may make your monthly statement a lot easier to read, it also means you’ll be paying higher rates for a lot of transactions. It has the potential to save you a lot of money, and it’s definitely much more transparent than traditional tiered-pricing plans.

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