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The 3 best price structures for credit card processing | Interchange

Posted by Alex Neir on Thu, August 26, 2010 @ 04:18 PM

The 3 best price structures for credit card processing | Interchange Plus

price structures for credit card processing
There are many ways to set up the pricing structure for a credit card processing account. We will discuss the 3 best price structures for credit card processingand give a detailed explanation of each.
  1. ERR Pricing: One rate
  2. Tiered: Two to four rates
  3. Interchange Plus: Every rate

The third price structure for credit card processing is called Interchange Plus Pricing. Interchange Plus pricing gets its name based on the fact that the rate charged for the transaction comes straight from the Interchange table “plus” a surcharge amount.

As a merchant business with a interchange plus pricing structure, you will be charged the Interchange Table rate that the transaction qualified at plus a surcharge amount. The surcharge amount is negotiated with your merchant service provider. We will use 50 basis points or 0.50% for illustrative purposes.

(The Interchange Table is the rate table set up by Visa, MasterCard, Discover and American Express to facilitate the acceptance of plastic as a form of payment. There are currently over 180 different interchange rates that can apply. The rate is determined by how the card is transacted – swiped vs. keyed and the type of card that is transacted – debit card, check card, rewards card, corporate card, international card) More information on interchange fees

Transaction Amount = $100

Interchange Qualification

Interchange Rate

Surcharge

Cost

Check Card, Swiped

1.65%

0.50%

$2.15

Rewards Card, Swiped

1.90%

0.50%

$2.40

Check Card, Keyed In

2.35%

0.50%

$2.85

Rewards Card, Keyed In

2.45%

0.50%

$2.95

International Card, Swiped

3.07%

0.50%

$3.57

The interchange plus pricing structure for credit card processing is most advantageous for merchants that are transacting large volumes.

What pricing structure is right for my business?

Tags: Interchange Fees, Pricing Structure for Credit Card Processing, Interchange Plus Pricing, Credit Card Processing Fees