Interchange
Plus

There are several pricing options offered to merchants. MMD only offers Interchange Plus. Why? Because it is the cheapest and most transparent way of processing. All of the large retailers use Interchange Plus.

 

What is Interchange Plus?

Below is an explanation of what fees are charges in the industry.

 

Interchange Plus is a program that is a cost-plus model. Whatever the banks. Visa/Mastercard/Discover/Amex charge plus a small fee for handling the transaction. 

 

Other pricing models & why not to use them:

There are two other pricing models offered. 

-Fixed rate: Some companies are offering a simplified processing structure. With only two pricing options, Swiped and Key entered. These models bet that the merchant will take less expensive card than the set fixed price. If the merchant is well educated and works with a fair processor like MMD. Fixed rate is a more expensive option.

 

-Qualified/Tiered Pricing: Some processors offer a Qualified/Tiered program. They sell this as an easier to understand and simpler statement. Instead of listing each card that was processed and connect it to a fee. They create 3-5 tiers/buckets with set prices. So if you process a card that cost 1.9% but that card falls in the 2.2% bucket, the merchant just overpaid.

 

What are the fees I am paying?

96.5% of the fees a merchant pays are NOT negotiable. There are three main buckets of fees.

-Bank Issuing Fees (better known as Interchange) - 87.5%

  • These fees are set by each card issuing bank. Currently, there are 400+ interchange fees. Some cards are more expensive than other.

    • The cheapest cards today are debit cards which are as low as .05% + 21 cents. On a $100 transaction, that equals $0.27 in cost.

    • One of the most expensive cards today is priced at 3.9% + .15 cents. On a $100 transaction, that equals $4.05 in cost.

  • In todays market, we are seeing a 40+% debit card mix. This is resulting in an average interchange cost of 1.4%.

  • Every April and October the card issuing banks can change the interchange cost. Normally these fees bounce up and down depending on what cards are issued to customers the most. 

-Visa/Mastercard/Discover/Amex Assessments - 9.0%

  • Assessments are charged by the card associations. These fees are very minimal and rarely change. 

-Processor charges - 3.5%