When you accept credit cards at your business there can be a variety of fees to untangle.
Interchange fees are set by the card networks (Visa, Mastercard, American Express, Discover) for processing a debit or credit payment. However, they are charged to the Issuing Bank. Interchange Fees make up a majority of the cost involved in accepting card payments. In essence, Interchange is a small fee paid by a merchant’s bank (acquirer) to a cardholder’s bank (issuer) to compensate the issuer for the value and benefits merchants receive when they accept electronic payments.
Interchange Fees are set by the network.
These fees are collected by the bank.
Interchange Fees are non-negotiable.
The nuts and bolts of Interchange Fees:
For business owners, understanding the concept of Interchange Fees can be elusive. There’s a lot of terminology and various banks involved. Put simply, Interchange is the transaction fees that a merchant bank must pay whenever a customer uses a credit/debit card to make a purchase in their store. The fees are paid to the card-issuing bank. As a payment processor, it’s Bank of Merchant’s goal to make the how, what, and why of fees transparent to you.
Varying Interchange Rates:
Interchange Fees are based on a variety of factors. Some of them include:
- The processing method (terminal used – swipe/chip/tap)
- Type of card used for payment (i.e. debit vs. credit)
- Industry or type of business (i.e. retail, restaurant, E-Commerce, etc.)
What makes up Interchange Fees?
Interchange Fees represent 70% to 90% of the total fees paid to banks by merchants. This is by far the largest percentage of fees they pay for the right to accept credit and debit transactions. This Interchange Fee is comprised of exactly two parts and they constitute what your business will be charged in total by the Issuing Bank. The two parts of the fee are:
- a fixed rate/fee for every card purchase made in your store
- a percentage of the transaction amount
Work with Bank of Merchant
Like Assessment Fees, Bank of Merchant does not set or collect any money from Interchange Fees. Our job here is to provide a customized payment system that enables your business to maximize it’s potential. We take a comprehensive approach to your unique needs and design a system that’s efficient, customer-friendly, and promotes growth.
Contact us today for more information about rates, fees, and pricing! We look forward to working with you at Bank of Merchant.