Let’s understand Interchange. Interchange or Interchange Reimbursement is a fee charged by the card brands that the acquirer* pays to the card issuing bank on each sales transaction. Interchange Reimbursement is published information.
Interchange was developed as an income incentive for banks to issue MasterCard and Visa cards. Referred to as Issuing Bank**. There are over 400 different categories of interchange. A transaction will be accessed an interchange cost based on how the card is processed, when the transaction is settled, the type of business that accepts the credit card, just to name a few variables. Most business will only be affective by a small fraction of interchange categories. A business that accepts and processing credit card in reality does not “pay” interchange. It is paid by the acquirer* / processor***. In an Interchange Plus arrangement, these cost are passed thru to the merchant. Interchange also typically represents the largest portion of a merchant’s total fees. There is also various Assessments or some time referred to dues and assessments. Assessments are paid directly to Visa and MasterCard and typically offset the brands’ costs to operate and regulate the networks. These fees are also passed thru in some form to the merchant and generally represent a smaller portion than interchange fees.
Now for the plus part of the equation. The PLUS is the mark up over interchange or cost as explained above. This makes it easy to shop as the pricing or markup is known. This is most transparent pricing model, which why it is the best of all models.
After you know the company that you are talking to is offering Interchange Plus and the mark up, then one needs to find out any other monthly, quarterly or annual fees, like PCI fees or regulator fees that we see from our competitors. Also ask what are the contract terms. Is there an early termination fee?
With First Coast Payments, we strive to provide our services to you with overall cost as low as possible while offering great service to save you time, money and frustration.
Call us today as we are ready to serve you 904-567-8612.
**Issuing Bank: The bank or financial institution that issues the card to the end user
*Acquirer: Is also known as an independent sales organization (ISO). The ISO sale the credit card processing services. With this comes the maintenance of the account and billing for the fees. An ISO has a sponsoring bank in the back ground.
***Processor: A large data center that processes credit card transactions and settles funds to merchants. A processor connects to the merchant on behalf of an acquirer via a gateway or terminal or a Point of Sales system to process credit card payments electronically.
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