We use this information to deliver the best quote possible.
First, the Interchange Cost
Interchange fees are set by Visa and MasterCard and paid to the customer’s bank (issuing bank). These vary depending on the type of credit card (consumer or premium) and how it is entered (card swiped or. manually keyed).
Processors and merchants of all sizes are bound by the same Interchange. As you go through the various pricing methods below, pay attention to the blue, this is the processor’s profit margin. Notice how it changes between the various pricing methods.
Interchange + (Cost+)
Interchange Plus pricing is still uncommon, it has the lowest margins for a processor. The processor passes the true Visa and MasterCard costs on to the merchant, and charges a single markup (%) on top of the processing volume.
Interchange+ pricing (also known as Cost+ pricing) is a billing method to give you further transparency and savings. When you process a transaction, we pass the interchange cost directly on to you. At the end of the month, we charge you a set rate depending on volume (such as 0.20% & .10 cents a transaction) on your total processed volume.
We offer all of our merchants Interchange+ Pricing as it creates a very transparent arrangement between us and our clients.
Why is Interchange+ Better?
Savings and transparency! Many processors use “tiered” pricing, where you are charged a base “qualified” rate and then charged a “non-qualified” fee for most transactions. This results in rates that are much higher than needed.
By passing the cost directly to you and only charging for a single markup, Interchange+ pricing gives you significant savings while creating a very transparent arrangement with us.
Flat Discount Rate
Flat pricing typically has a flat percentage and a per transaction fee, regardless of the types of credit cards used or how they are entered. Only a few major online processors use this pricing method, such as PayPal or Square.
Tiered pricing usually consists of having a lower “qualified” rate for certain transactions and higher “mid” and “non-qualified” rates for others. This is the most common pricing method in the US. The common drawback is that merchants are enticed with a low “qualified” rate, but nearly all transactions end up in the higher mid and non-qualified tiers.
By far the most common pricing in Canada, Interchange Differential is the default for almost all processors including Moneris and TD.
Similar to tiered pricing, “qualified” and “non-qualified” fees are charged, but merchants are also charged “interchange differential fees” for credit cards. This results in merchants paying multiple fees on the same transaction, essentially being double billed.