Interchange plus credit card processing

Cost plus pricing (also known as interchange plus pricing or interchange pass through) is a payment processing method that provides merchants with a higher level of transparency and increased savings compared to a tiered pricing model. With interchange plus pricing,  the processor only charges an agreed-upon fixed transaction fees on top of interchange levels that are set by Visa and MasterCard. At the end of the month you’ll receive a statement that shows the breakdown of the charges.
For example, if a transaction had an interchange fee of 1.70%, you would be billed 1.70% for the transaction and 0.18% (or 18 basis point) for our service. Your total cost on that transaction would equal 1.88%.

Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. In a credit card or debit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. Interchange fees are set by the payment networks such as Visa and MasterCard and are the largest component of the various fees that most merchants pay for the privilege of accepting credit cards, representing up to 90% of these fees by some estimates, although larger merchants typically pay less as a percentage.

Interchange fees have a complex pricing structure, which is based on the card brand, regions or jurisdictions, the type of credit or debit card, the type and size of the accepting merchant, and the type of transaction (e.g. online, in-store, phone order, whether the card is present for the transaction, etc.) Transactions that comply with highest level of payment security have a lower interchange fee.

These rates will be the same no matter what processor company you use as they are determined by Visa/MC and the issuing bank based on four key factors:

  1. Brand and type of card the customer uses (Credit, Debit, Rewards, Corporate, etc.)
  2. Type of business you run (Retail, Restaurant, Gas Station, Hotel, e-Commerce, etc.)
  3. Type of transaction that was made (card present vs card not present transactions)
  4. Information collected with transaction for verification (address verification, tax amount, etc.)

In the United States, the fee averages approximately 2% of transaction value. Click here to view Visa’s interchange listing as of April 2015.Visa-USA-Interchange-Reimbursement-Fees-2015-April-18 

Why is interchange plus credit card processing to your advantage?

  • Lower total processing fees
  • Complete transparency

Interchange plus pricing is one of the simplest and most straightforward pricing models for you as a merchant. As opposed to “tiered” pricing, where you are charged a base “qualified” rate and then charged a “non-qualified” fee for most transactions, “interchange plus pricing” allows you to pay per transaction as they qualify for various interchange rates and pay a fixed fee to your processor that handles the transaction. This results in significantly lower processing rates and much more transparency in associated transactions fees.

How to qualify for Interchange plus pricing?

Any business can qualify for interchange plus pricing model but every business pays a different fee based on the factors mentioned above. The types of cards and the credit card processing method are the two main factors that determine your final rates.

Can interchange rates be negotiated?

No! But processing volume and increased security of payments can lower the interchange levels. Traditionally, larger transaction volumes and transactions made with more secure cards qualify at lower rates.

Can rates be locked?

Yes! At Century Business Solutions, we are looking for multiple ways to reduce your rates and keep them as low as possible for the life of your account. We can lock your rates and monitor your account to make sure that your transactions get qualified at the lowest possible rates.

Interchange+Rate

merchant account

Apply for interchange plus pricing

To apply for interchange plus credit card processing give us a call at 1-888-500-7798 or fill out the form at the right side of the screen to contact us.