How Rising Interchange Rates Can Affect Your Business

Interchange Rates

There are many third-party processors out there that benefit when the Bank Card Associations, Visa and MasterCard, raise their rates. They look at this as an opportunity to make an additional profit from their merchants. Merchant services providers get to decide how they will pass the various increases and decreases through to the merchant. More often it is the increases that get passed on, and not the decreases. New Visa and MasterCArd Interchange Rates and other processor Interchange rates schedules are typically published by the Bank Card Associations in April and October.

Since there are many different processing categories for Interchange rates, they can be confusing to most merchants. Merchants pay higher or lower rates depending on, but not limited to, whether or not it was a rewards card, purchase card, or debit card. Rates can also be assessed based on your SIC code and how often you batch your terminal.

I would recommend that all merchants become familiar with the Interchange rate for their industry, as well the manner in which they take their cards (swiped or keyed).

This way you can negotiate your rates with your merchant services provider accordingly. Just because your payment processor claims the rates went up does not mean they went up for your type of business. Some processors may even entice merchants with low rate like 1.11%, only to have you start processing and realize that rate does not pertain to your type of business.

Fortunately, there are a lot of processors out there that don’t hide fees from their merchants. It is important for merchants to be educated about card processing fees.

If you have received a statement with an increase notice on it, be sure to do your research so you know exactly what is being increased.

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