What are credit card interchange fees?

What are credit card interchange fees?

This is a very good question and is important to understand if your business accepts credit cards or would like to. When thinking about interchange fees, it helps to think of it as a toll way.

Interchange is, in effect, a toll road that must be driven in order to access the card holders (your customer) account information at the card issuing bank. The interchange fee is the toll for accessing that information.

The interchange fee is paid by you (the merchant) to the card issuing bank. The issuing bank collects the fee to recoup the cost associated with enabling consumers with the ability to pay with a piece of plastic.

Another item to be aware of is the assessment fee. The assessment fee is charged directly by Visa and MasterCard to cover their operating costs. The Visa assessment fee is currently .0925% and the MasterCard assessment fee is currently .0950%. Both Visa and MasterCard regularity adjust these fees and typically do so in April and October. The assessment fee is always applied as a percentage the total purchase price of the product or service sold.

What are the current credit card interchange fees?
There are currently 315 different levels of interchange fees. The reason for so many different levels and fees is due to a few factors.

1. The industry of the merchant. The industry of the merchant will be one of the initial factors considered when the interchange fee is applied. Some of the industry specifications include supermarkets, restaurants, hotels, passenger transport, etc.


2. The means in which the card is transacted. The means in which the card is transacted refers to whether the card is present at the time of the transaction and swiped through a terminal or the card is keyed into the terminal for processing.


3. The type of card that is transacted. The type of card that is transacted refers to the type a card presented by the customer. Typical card types include debit cards, check cards, reward cards, international cards and corporate cards.

What are some ways in which to reduce the interchange fees that are charged?

1. Swipe the card through a terminal rather than key the card data into the terminal.


2. Use an address verification service (AVS) when transactions are keyed into the terminal. This service helps to reduce fraud.


3. Run your batch process daily.

Through adhering to these three scenarios you give yourself the best chance at qualifying for the lowest interchange fees. The goal is to avoid being downgraded. You will downgrade (pay a higher interchange fee) when criteria for the lower fee are not met. Every time the transaction moves further away from the required criteria, more risk is associated with the transaction and it will cost more to transact.

Interchange fees for a retail purchase of $100

Example	Visa Interchange Rates	Interchange Charged to You
The card is swiped through a terminal; the transactions are settled an a daily basis	1.68 % + $0.10	$1.78
Transaction is keyed into the terminal, AVS is used; All transactions are settled on a daily basis	1.85 %+ $0.10	$1.95
Transaction is keyed into the terminal, AVS is not used; All transactions are settled on a daily basis	2.39 % + $0.10	$2.49
The card is swiped through a terminal; The transactions are settled on a monthly basis	2.80 % + $0.10	$2.90

I hope this article is helps you and your business understand credit card interchange fees. If you would like additional guidance in avoiding mistakes when opening a merchant account please download our whitepaper.

Automated Payment Processing

Automated Payment Processing

Are you looking for and automated payment processing account for your business? The addition of an automated payment processing solution is an easy way to enable your customers to purchase products without direct assistance. Automation allows you to focus on other areas of your business rather than order placement.

Here are the areas of automated payment processing that we can help with:

• Recurring & Non-Recurring Receivables


• Electronic Check Acceptance


• Virtual Terminal and Payment Gateway


• POS (Point Of Sale) systems

With any business the first step is determining the area of the business that would benefit most from an automated payment processing solution. Once a need is determined the next step to consult with a payment processing provider to determine the very best solution available. Once a solution is identified the next step is to determine the costs. Please refer to affordable credit card processing for a detailed explanation of the cost associated with an automated payment processing system.

Once you understand the costs you are now in a position to make the best decision for your business.

As always please contact us if you would like assistance determining the best solution for your business. (800)917.8026

Automated Payment Processing

Automated Payment Processing

Are you looking for and automated payment processing account for your business? The addition of an automated payment processing solution is an easy way to enable your customers to purchase products without direct assistance. Automation allows you to focus on other areas of your business rather than order placement.

Here are the areas of automated payment processing that we can help with:

• Recurring & Non-Recurring Receivables


• Electronic Check Acceptance


• Virtual Terminal and Payment Gateway


• POS (Point Of Sale) systems

With any business the first step is determining the area of the business that would benefit most from an automated payment processing solution. Once a need is determined the next step to consult with a payment processing provider to determine the very best solution available. Once a solution is identified the next step is to determine the costs. Please refer to affordable credit card processing for a detailed explanation of the cost associated with an automated payment processing system.

Once you understand the costs you are now in a position to make the best decision for your business.

As always please contact us if you would like assistance determining the best solution for your business. (800)917.8026

7 items to consider when looking for affordable credit card processing

7 items to consider when looking for affordable credit card processing

The term affordable credit card processing is thrown around a lot and can mean different things to different businesses. For the purposes of this article we will discuss the affordability of credit card processing in terms of the rates and fees that are charged for the service.

I have broken out the major rates and fees charged for credit card processing. Please keep in mind that there will always be other miscellaneous fees, so be sure to read your merchant contract carefully to understand all that apply and when.

Discount/Percentage Rate (interchange): This is the largest total expense for the account and is typically negotiable with your processor. There are typically three discount rates associated to the account (this example is for a retail location). The three discounts rates are referred to as the qualified, mid-qualified and non-qualified rates. The qualified rate is reserved for card present / person present transactions. The mid-qualified rate is reserved for keyed in transactions and certain rewards cards. The non-qualified rate is reserved for corporate and international cards. Some rewards cards will also downgrade to the non-qualified rate. When looking for affordable credit card processing you want to achieve the following for each discount rate:

• Qualified Rate: Between 1.59% and 1.69%


• Mid-Qualified Rate: Between 2.29% and 2.39%


• Non-Qualified Rate: Between 2.99% and 3.09%

Per-Transaction Rate: In addition to the discount rate you will also be charged a per-transaction rate. The per-transaction rate is charged for each transaction that is run through the account. It is important to note that some processors will set up the account to authorize and capture as separate processes, effectively doubling the transaction costs per month. Make sure your processor is authorizing and capturing as one transaction. When looking for affordable credit card processing as a function of the per-transaction rate you want to be between $0.10 and $0.20 per-transaction.

Monthly Service Fee: This is the amount you are charged per month for customer service, account access, statement preparation etc. For an affordable credit card processing account you need to be between $9.95 and $14.95.

Batch Fee: The batch process is responsible for converting the credit card authorizations (promise to pay) into deposit of funds into your business account. The batch process is typically run on all days where authorizations are processed. For an affordable credit card processing account you want establish a rate between $0.15 and $0.25 per batch process.

Monthly Minimum: The monthly minimum is the amount that is charged if the account is not used or used minimally. An affordable credit card processing account will typically have a monthly minimum of $0.00 to $9.99.

Annual Fee: The annual fee is a fee that your business is charged once a year for maintenance of your merchant account. You are best served to negotiate this rate to $0.00.

Termination Fee: This is the fee you are charged if you would like to end your contract early. This fee varies greatly form one processor to the next. Make sure you understand the contract term and termination fee.

If you are looking to set up an affordable credit card processing account we can certainly help. Please contact us directly for a no obligation quote. (800)917-8026. Mention prom code affordable for additional discounts.