Interchange plus sounds like something that would be crowded with cars during rush hour, but it’s actually an important concept to know if you accept credit cards in your business.

First, it would be helpful to understand what the term interchange means.  The term refers to the credit card processing rates that are set by card brands such as Visa, MasterCard and Discover.

Interchange plus refers to a merchant account pricing model that is often less expensive than standard merchant services.  The costs involved in interchange plus include a fixed markup applied directly to the interchange fees published by Visa, MasterCard and Discover.  Hence, the “plus” is the processor’s markup that’s applied to each credit card transaction.

The processor’s markup is usually expressed as basis points. This is a unit of measurement that is equal to 1/100 of one percent, expressed as .01%.  Various factors can be considered when a processor gives you a quote with a basis point markup, including but not limited to business type, processing method,  and business owner credit worthiness.   So, a complete description of interchange plus would be base credit card processing rates that include a fixed markup consisting of basis points and an authorization fee.

When shopping for a credit card processor, you can ask them to provide you with a quote that includes the basis points, but it’s important to remember that this number should not be the sole determinant in whether you go with that particular processor. In fact, the most important number you should consider when choosing a processor is actually the effective rate.  This is measured by dividing processing fees by sales volume.  This works best for existing businesses that have data to work with, but can also be used with new businesses, although it may be more of an estimate there.  The effective rate is designed to give a general measure of how competitive the quotes are at a particular time.

Different fees can be charged, depending on the interchange category. For example, debit cards, credit cards, personal credit cards and business credit cards each have their own interchange category.  In addition, the way the card is used (swiped, entered online, etc.) is used to determine the proper interchange category.

The markup fee as expressed in basis points doesn’t change with each type of transaction. It’s applied the same across the board.  The markup fee and the interchange charge/authorization fee combine to produce the merchant ‘s cost to process the transaction.

There are excellent benefits to using this type of pricing as opposed to any other pricing model.  It is the most transparent, as the fees are more clearly defined.  Interchange Plus pricing also guarantees that you never pay too much for any particular transacion.  In addition, it is the most cost effective form of merchant account pricing by preventing hidden surcharges and other costs that are sometimes included in other pricing models.

Bankcard Brokers offers interchange plus to all of its clients at competitive pricing.  The Bankcard Brokers team provides excellent support to its customers and will strive to provide you with the absolute best effective rate possible for your credit card processing – guaranteed!  Our service is backed by our promise: Credibility, Legitimacy, Transparency and World Class Support.  Bankcard Brokers provides merchant services to thousands of businesses across the country and the world.  Contact us today to see how we can provide you the best interchange plus rates and service.

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