When you’re looking for a credit card processor you’ll hear about different pricing structures such as tiered pricing, flat-rate pricing and interchange plus pricing.
We want to pull back the curtain on a piece of interchange plus pricing. If you already have a processor, you might know about interchange or interchange plus pricing but what we’re going to talk about today is exactly what the interchange fee is. Whether this information is familiar or new, we hope it will help you make a smart decision about choosing a payment processor.
1. Interchange Is Visa’s® Cut (and MasterCard’s® and Discover’s® and Amex’s®… )
To put it simply, interchange is the fee that Visa, MasterCard, Discover, etc. take out of the transaction. It’s the same for every single merchant. All of them. Everywhere. So, when you see an interchange fee think to yourself “Visa’s cut.” These fees are standardized and the sandwich shop down the street pays the same rate that the professional association in an office building pays.
2. Interchange Rates Vary
When your account is set up with interchange plus pricing you’ll see that different cards have different fees and there are quite a few differences! One of the biggest is the difference between debit and credit cards. Debit cards almost always have lower fees and different types of credit cards have varying fees depending on their risk to the card-issuing bank. Although the major card issuers can and do change their rates, the numbers tend to fluctuate only slightly and at fixed times. For instance, Visa updates rates every April and October. Sometimes they go up a little, sometimes they go down. Your processor shouldn’t change their part of the transaction fees unless they notify you, so you shouldn’t run into “surprises” on your bill.
3. The Interchange Rate Is Non-Negotiable
If your processor tells you that they have the best interchange rate, run away fast! Because interchange rates are fixed prices, the only merchants (if you can call them that) that hold enough sway to negotiate with someone like Visa are the Walmarts of the world. If you’re not close to Walmart in transaction volume, you’re getting the same, standardized rate everyone else. This puts more power in your hands since you know that the best processor is one that is upfront and honest with you about what effective rate they’re offering and not one that says they can “get you a discount on interchange.”
Interchange fees are only one piece of the puzzle and hopefully you now know a little more about what exactly an interchange fee is. Here at Tidal, we offer interchange plus pricing with a transparent effective rate. Interchange plus pricing is the industry standard for transparency and cost-effectiveness. Not only do we offer a better value but our commitment to service, transparency as a family-owned business and leading-edge integrations make us the clear choice.