Should you didn’t know this, I’ll educate you on the little secret. About 80% of the credit card merchant account pricing is originating from only one source, which source is the interchange reimbursement fee.
I won’t enter into an excessive amount of detail about how exactly the interchange reimbursement fee works, but when you’re feeling ambitious, there are many online sources where discover more.
But, what exactly are interchange charges anyway? In the following paragraphs, I’ll give the CliffsNotes version.
Interchange Reimbursement Fee
Interchange reimbursement is really a set fee the obtaining bank is billed through the issuing bank whenever a charge card transaction, or “interchange” occurs together. The charge is produced and controlled through the charge card companies, Visa and MasterCard.
Both Visa and MasterCard be capable of change individuals interchange rates two times annually in April and October.
Visa Interchange Rates (PDF)
MasterCard Interchange Rates (PDF)
Check out the above mentioned PDF docs and you’ll observe that there’re tens, otherwise hundreds, of various rate groups (tiers) for various charge card transactions (i.e., CPS/Automated Fuel Dispenser, Debit, CPS/Supermarket Debit—All Other, blah, blah, blah).
You don’t need to waste your time and effort attempting to commit to memory these now, but later on I’ll demonstrate cooking techniques like a reference to reduce your credit card merchant account costs.
That which you need to learn about interchange is always that each and every transaction occurring, whether in your website or perhaps in your store, falls into certainly one of individuals rate tiers.
You won’t ever know in advance which category your transactions is going to be billed under. That can be the charge card company to determine.
Are you able to begin to see the problem here? How’s it going designed to compare merchant services according to rate if individuals minute rates are so dynamic? It might be impossible.
In order to simplify this complete mess, the ISO/MSP’s around the globe have produced their very own prices structures:
Tiered-Prices and Interchange-Plus.
If you are searching to reduce your current credit card merchant account charges, I could possibly help. Click the link to find out more.