Interchange-Plus Pricing: Everything You Need to Know
Interchange-plus pricing, also known as cost-plus pricing, is a type of payment processing structure that ensures merchants pay the least amount for their credit card transactions. It’s designed to separate the interchange fees (which vary by card brand and purchase size) from the processor’s markup. The merchant is responsible for paying the interchange fees and the processor’s markup.
Interchange-plus pricing is considered the most transparent pricing structure for payment processing, as it clearly assigns costs up front. This makes it easier for merchants to compare rates between different processors. It also helps them better understand any additional fees that may be added on top of their interchange fees.
The structure of interchange-plus pricing can vary depending on the processor. Generally, there are three components:
- Interchange Fees: This is the fee set by card brands (Visa, Mastercard, etc.), which don’t change from processor to processor. It is calculated as a percentage of the total transaction amount and depends on factors such as the type of card used and if it’s a rewards card.
- Processor Fee: This is an additional fee charged by the processor for services such as processing, customer service, and fraud protection. It’s usually set as a flat rate plus a percentage or transaction amount.
- Additional Fees: Processors may charge additional fees for special services such as payment integration or technical assistance.
Interchange-plus pricing is the most cost-effective way to process payments, as it allows merchants to pay a consistent rate regardless of purchase size or card type. It also makes it easier for them to spot any hidden fees that may be charged by their processor. Ultimately, interchange-plus pricing is the most transparent way to pay for credit card transactions and ensures merchants get the best deal.
If you’re looking to save money on your payments processing, consider switching to an interchange-plus pricing structure. It’s a great way to ensure that you are paying the lowest fees possible for your credit card transactions!