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March 15th, 2010, 06:03 PM #1Interchange Plus
Any good companies out there offering interchange plus pricing on merchant accounts? How many basis points are most offering?
April 6th, 2010, 02:04 PM #2
Popular topic... :P
Anyway, I talked with a few companies and went with one I was comfortable working with. They were all willing to offer better rates to win the business, so I went with the rep I felt most comfortable with.
For those who don't know about interchange plus, I'll try to give a basic overview.
Visa, Master Card, etc have hundreds of rate categories. These are what they call interchange rates, and they are what they charge credit card processors for each transaction. The 100s of different rates cover every card type, merchant category, transaction type, etc. Tiered merchant accounts (the most common) lump all the rate categories into only a few, and charge one rate for each tier. Three tiers is most common - qualified, mid-qualified and non-qualified, but how each processor groups the rates varies.
Card not present (Internet, telephone, catalog, etc) transactions for example, may fall under mid-qual or even non-qualified depending on the merchant account. The highest tier can be more than double the lowest, so categorization of the interchange rates to make the tiers can make a huge difference. Unfortunately, it's impossible to know how each processor categorizes their tiers.
Paypal and Google make it pretty simple with a single tier, plus additional for foreign issuers, and a healthy per transaction fee, but they're still charging a single rate for transactions that really fall into 100s of rate categories, some of them much lower.
Interchange plus works on a direct pass through of the interchange rates the processor is charged by the card companies, plus the processor's mark-up. Mark-up can be applied to a variety of fees, from per transaction fees, batch fees, gateway set up fees, etc, but the main mark-up is applied to the interchange rate in "basis points". One basis point is equal to 1/100th of a percent, so a rate of interchange plus 20 basis points would mean that you'd be charged the actual interchange rate plus 0.2%, or $.20 on a $100 transaction.
The other fees can sometimes be treated as a revenue stream by the processor, so watch those as well, but overall interchange plus can work out to be much cheaper and much more transparent.
Interchange plus is not for everyone though. You have to meet volume requirements set by the processor to qualify ($10k a month seems common). Volume and stability are also your leverage. High volume/low risk merchants can get much lower rates than lower volume and/or higher risk merchants, and much, much lower than on tiered accounts.
I'm starting to ramble, but I hope this helps.
January 13th, 2011, 11:40 PM #3
- Join Date
- January 13th, 2011
If you are still looking, please check our pricing site
Moderator Note: Removed
or contact me directly if you have any questions.
Last edited by 2busy; January 14th, 2011 at 12:56 AM. Reason: Removed link
January 14th, 2011, 01:07 AM #4
May 16th, 2011, 09:21 AM #5
Interchange Plus/Cost Plus
- Join Date
- May 16th, 2011
Very transparent and to this day if ever I call the sales rep that initially sold me the service, he still picks up or returns my calls and will honestly answer any question. Moderator Note: To advertise a business, you'll need an ad: http://www.abestweb.com/advertising/
Hey Alex, as I posted I'm all set
Last edited by 2busy; May 16th, 2011 at 01:22 PM. Reason: unsolicited commercial advice
November 2nd, 2011, 09:35 PM #6
- Join Date
- November 2nd, 2011
He will take care anyone, just let him know Chad sent you. He works for Chase in the partnerships department. If you know Chase, they are the largest bank and going through this guy cuts out all the middle men and he saved me about 300 bucks a month and explained to me every detail about what happened. He actually switched me over to interchange + vs 3 tier which was what I was on.
Hope you all will benefit off of this too. With all these resellers and mlm's out there, the market is just rediculous.
Last edited by teezone; November 2nd, 2011 at 11:05 PM. Reason: removed name & phone number of contact