The Right Pricing Plan for your Business

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There are hundreds of different interchange rates for your business. You have to make sure you're on the correct interchange rate plan or you may receive unnecessary fees.  Some examples are non-profits, retail/brick & mortar stores, Virtual or Online stores, business-to-business, lodging & hospitality, restaurants & quick service restaurants.

An interchange rate is a fee that is charged between banks for the acceptance of card-based transactions. When a customer makes a purchase using a credit or debit card, the interchange rate is the fee paid by the merchant's bank (acquirer) to the bank that issued the card to the customer (issuer). This fee is intended to compensate the issuer for the costs and risks associated with processing electronic payments.

Key points about interchange rates include:

1. Transaction Processing Costs: The interchange rate covers various costs incurred during the processing of a transaction, including authorization, clearing, and settlement.
2. Risk Considerations: Interchange rates are influenced by the level of risk associated with the transaction. For example, credit card transactions may have higher interchange rates than debit card transactions due to the additional risk involved in providing credit.  Another example is a skydiving merchant, their risk is higher than a bookstore merchant, due to the risk involved in skydiving, therefore their interchange rates will be higher.
3. Network Fees: Payment card transactions often involve payment networks (e.g., Visa, Mastercard) that facilitate the transfer of funds between banks. Part of the interchange fee goes to these networks for their services.
4. Business Type: Interchange rates can vary based on factors such as the type of card used (credit, debit, rewards), the nature of the transaction (online, in-store), and the industry of the merchant.

Merchants typically pay interchange fees as part of the overall cost of accepting card payments. The fees are established by payment networks and are subject to agreements between banks and card issuers.

 Debit interchange rates are generally lower than credit card rates for several reasons:

1. Risk Profile: Debit cards are often considered lower risk compared to credit cards. When a transaction is made with a debit card, the funds are directly withdrawn from the cardholder's bank account, reducing the risk of non-payment or default.
2. Funding Source: Debit transactions are funded by the cardholder's own money in their bank account, while credit transactions involve extending credit to the cardholder. The use of the cardholder's own funds lowers the risk for banks and financial institutions associated with debit transactions.
3. Network Fees: Debit transactions typically involve fewer intermediaries and processing steps compared to credit transactions. This can result in lower network fees associated with debit card transactions, contributing to lower interchange rates.
4. Loyalty Programs: Credit cards often come with rewards programs and other benefits for cardholders. The costs associated with these programs can be factored into the overall interchange rates for credit cards, making them higher compared to debit cards.  Typically, the merchant absorbs the cost of the loyalty programs, not the Banks.

It's important to note that interchange rates can vary between different payment networks, card issuers, and regions. The factors mentioned above contribute to the general trend of debit interchange rates being lower than credit card rates.

Surcharging or the Cash Discount Program lets you pass 100% of the processing fees to credit card paying customers.  You have the option to apply this additional fee to a customer's invoice.

This program saves merchants the cost of fees associated with accepting credit cards.

Note: this program does not apply to debit cards.

Our experienced consultants will work with you to identify areas of improvement and develop strategies to help your business grow and achieve success. We provide a comprehensive range of services including merchant statement review, confirming your business transactions are clearing at the correct interchange levels for maximum profitability.