Interchange plus is a billing method used by T360 to give you further transparency and savings. When you process a transaction, we pass the interchange cost directly on to you. At the end of the month, we charge you a set rate on your total processed volume.
Qualification of a transaction
For each transaction made with a credit card, there are parameters around the use of it.
Qualified Rate: Transactions that meet all the requirements for the merchant’s industry. Merchants will pay the lowest or best discount rate for qualified transactions.
Partially Qualified Rate: Transactions that meet some, but not all of the specific requirements for the merchant’s industry. Merchants will pay a higher rate for partially qualified transactions
Commercial Non-qualified: Commercial card transactions that meet some, but not all of the commercial card requirements.
Non-qualified rate: Transactions that do not meet other specific requirements for the merchant’s industry. Merchants will pay a higher rate for non-qualified transactions.
Card-not-present (CNP)
E-commerce, as well as m-commerce (mobile commerce), trigger a card-not-present transaction. Because the card cannot be verified through EMV or the business owner cannot verify the cardholder, the interchange fee for CNP transactions is typically higher than card-present.
Reward Cards
Typically, credit cards with rewards or “perks” have a higher interchange rate. This is because the issuing bank has an additional cost associated with that card to cover cardholders’ rewards or “perks.”
How to Understand your Interchange Rates
When it comes to processing payments, the interchange is the underlying cost of a credit card transaction from Visa®, MasterCard®, American Express, Discover® Network Cards, and other card brands. For every debit or credit card, there is a predetermined rate paid to the issuing bank, which is referred to as the Interchange rate or pricing.
Why is Interchange plus is Better?
As part of our commitment to our merchant “ Savings and transparency”
Many processors use “tiered” pricing, where you are charged a base “qualified” rate and then charged a “non-qualified” fee for most transactions. This results in rates that are much higher than needed.
Bypassing the cost directly to you and only charging for a single markup, interchange plus pricing gives you significant savings while creating a very transparent arrangement with your processor (you know our cost and margin!)
Interchange fees are set by Visa and MasterCard and paid to the customer’s bank (issuing bank). This is the orange in the charts. These will vary depending on the type of credit card (consumer vs. premium) and how it is entered (card-present vs. manually keyed).
PROCESSORS AND MERCHANTS OF ALL SIZES ARE BOUND BY THE SAME INTERCHANGE
As you go through the various pricing methods below, pay attention to the blue, this is the processor’s profit margin. Notice how it changes between the various pricing methods.
Interchange+ Pricing
Interchange plus pricing is still uncommon, as it has the lowest margins for a processor.
The processor passes the true Visa and MasterCard costs on to the merchant and charges a single mark up (%) on top of the processing volume.
We offer all of our merchants Interchange plus pricing as it creates a very transparent arrangement between us and our clients.
Tier pricing
Tiered pricing usually consists of having a lower “qualified” rate for certain transactions and higher “mid” and “non-qualified” rates for others.
The common drawback is that merchants are enticed with a low “qualified” rate, but nearly all transactions end up in the higher mid and non-qualified tiers.
