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What is Interchange and Interchange Plus?
Let’s start off with a brief understanding of Interchange and how a typical transaction breaks down. Interchange is a very large document provided by the card associations i.e., Visa and Master Card. Based almost entirely on actuarial sciences, the associations dictate what and how much each issuing bank receives for the ‘risk’ of issuing the average American a credit—or debit card.
Sufficed to say, since debit cards would present the lowest risk, the Interchange pricing is lowest—typically just over 1%. A corporate card however, being the largest risk to the issuing bank due to the simple fact that 70% of new businesses fail every year, would present the largest risk and therefore the largest price tag at just under 3%.
Basic Transaction Breakdown
The pie above shows the basic breakdown of where the money would go for a typical transaction;
1. Issuing Bank
The largest % goes back to the issuing bank (i.e., Chase debit / credit card).
2. Merchant Account Processor
Second is the processor, whomever facilitates the movement of those monies, (i.e. North American Acquiring).
3. Visa / Master Card
Last but not least is Visa, who gets the smallest %. Respective of their work / risk, they really don’t do much, they never touch the money nor do they take on any risk outside of advertising.
Would you like to schedule a time to talk with a specialist?
The documents linked below outline the actual card cost to the issuing banks and the fees that the card associations charge. Each document has a different layout and is relatively difficult to interpret as a casual reader. Should you have any questions or concerns please feel free to email or call us.
Click on the corresponding icon for which interchange document you wish to view.
Are you paying too much in credit card processing fees?
You probably get a monthly statement with added on fees that you don’t understand. A lot of credit card processors promise you the lowest rates possible, and then your rates go up without anyone telling you or you’re getting charged for annual fees that are written somewhere in fine print.
With our calculator, you can find out if you’re being overcharged by your credit card processor. Just look at your most recent processing statement, then enter your total monthly sales and total monthly fees into our calculator on the right.
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