Interchange is a fee that’s set by the credit card associations (Visa®, MasterCard®, American Express® and Discover®) and their stakeholders (mainly the banks that issue credit cards). Interchange is calculated as a percentage (usually 1 to 3 percent) of the gross sale amount on each credit and debit card transaction a merchant handles.
Sometimes referred to as a swipe fee, interchange is charged to merchant services providers (like TransFirst®) and paid to card-issuing banks (where the cardholders maintain their accounts) as compensation for processing credit and debit card transactions. The fee is subsequently passed along by the providers to their merchant clients.
Interchange is the largest component of the discount rate that appears on their monthly merchant account statements. The discount rate also includes association dues, network access charges and profit for the provider.
Here’s a graphic of how interchange works:
Pricing rules for interchange are very complicated and based on many variables. Among the card brands there are hundreds of interchange categories, reflecting the varying levels of risk associated with different types of transactions. For example, the interchange rate for card-present (face-to-face) transactions is lower than for card-not-present (CNP) transactions because the former is considered less risky than the latter.
Other factors that influence interchange include:
Card type (credit, PIN debit, signature debit)
Card program (rewards, business, etc.)
Business type accepting card (retail, restaurant, lodging, etc.)
Whether settlement was delayed
Whether AVS (address verification system) was used in CNP transaction
The credit card associations adjust their interchange reimbursement fee schedules twice a year and post them on their respective websites.
Interchange is not a negotiable part of your merchant account package with your merchant services provider since the provider has no control over the rate. Other fees for credit card processing are more flexible because they are set by the merchant services provider.
At TransFirst, our trained representatives can create a merchant account to meet your specific credit card processing requirements and your budget. Contact us today and put us to the test!
Richard Hari in your Colorado credit card customer service operation is one the best people I've ever dealt with in any type of business. I had a problem with credit card processing for my very, very small business. I was told I would get a call in two business days. Richard called in about 20 minutes. He was patient and took time to walk me through the process. Great job and a credit to TransFirst.
- Online Retailer | Bruceton Mills, WV
Two key things here. #1 – This program has saved me hundreds of dollars a year, and #2 – the service. The last time I called my question was answered in one simple phone call. We didn't take credit cards for a long time due to the expense ... I am so glad I took the time to listen when you came in because this is so much better.
- Restaurant Owner | Palm Bay, FL
TransFirst has done everything they said they would do, and they do it every month with service and savings. We are saving very big dollars each month, so we are very happy with the service.
- Police Benevolent Association | McDonough, GA
I'm writing to thank you for the superb customer support you've offered us in the setting up of our account. Your prompt replies to my questions, even through your illness, speaks very well of your organization and your own sense of responsibility. I would ask you to kindly forward this note to your supervisor, because I want him/her to appreciate your 'above and beyond' approach to your clients.
- Vision Care Provider | Windham, VT
I am extremely happy with TransFirst! The Transaction Express saves me hours a week with the ease of transactions and the up-to-date reporting. The service team is knowledgeable and eager to help. The best part, though, is the savings. Patrick made it so easy to switch merchant accounts. I wish I would have done it years ago!