Credit Card Interchange Fees. An Insider's Guide - Part 1
"What is Interchange?"
This is by far the most common question we get asked relating to credit card processing fees. Contrary to common belief, interchange is not a way to get from one freeway to another. To fully answer this question would take far more than just a couple hundred words on a blog. For that reason, I'm going to break this into multiple posts. Now for Part 1!
My Merchant Account Rates are Great
Everyone is somewhat familiar with merchant account discount rates and per transaction fees. Typically their credit card processing fees in this area are competitive, which leads to the knee-jerk “we have great rates” response. Of course you do, almost every moderately successful company that keeps an eye on their merchant account does. Your processor has no vested interest in your credit card interchange fees, however, because they don't see a single penny of those profits. The bigger question is - what are the wholesale costs associated with your credit card processing fees?
The Details
Credit card interchange fees what we like to refer to as the "wholesale cost" associated with processing credit cards – what Visa and Mastercard charge your processor on each transaction. This rate varies considerably from card-to-card, from industry-to-industry, and even from one like-business to another. For example: If someone pays you with a MasterCard World Elite Business Card, your your credit card interchange fees can vary from 0.7% to 3.17% of the sale amount, depending on a number of factors.
The catch is, you, yes you, can have a major impact on which credit card interchange fees your company qualifies for. If you do a few things wrong before, during, or after the transaction takes place, that sale that should have cost your 0.7%, could very well end up costing 4-5 times as much as it should. Now think of every credit card transaction you're running through on a day-to-day basis...
Do you know how well you're doing on your credit card interchange fee's? If not, stay tuned for our upcoming blog posts in this series. Or, if you don't want to wait until then, click on the button below to schedule your free consultation.
