Interchange-Plus Pricing - Changing the Face of Merchant Credit Card Processing?

There is a lot of buzz around the merchant service industry around the interchange-plus pricing model. As the level of understanding increases at the merchant level, so does the popularity of interchange plus pricing. Once upon a time, merchants were forced to use a tiered or standard pricing model. Years and thousands of accounts later, merchants are catching on to the scams that have plagued the industry.

A common practice is to quote a lower rate for a merchant's qualified transactions, usually in the neighborhood of 1.65%. The merchant is so excited by the low rate that he/she signs up for the new account without paying any attention to the mid and non qualified rates which can be as high as 5%. The result is higher total processing fees due to a majority of the merchant's transactions downgrading to the mid and non qualified buckets. (Most merchants process 75% of their transactions as mid and non qualified)

This tactic along with many others has made the topic of credit card processing a sore subject among merchants. In the attempts to gain clientele, some processing companies have decided to offer interchange-plus pricing to their merchants.

Interchange-plus pricing is a model that was once reserved for only the largest of merchants. In the simplest of terms, interchange plus pricing takes the fees charged by Visa and MasterCard and adds a fixed percentage to compensate the merchant service provider. For example: a merchant setup on interchange plus 30 basis points would pay 1.58% to the credit card provider (Visa or MasterCard) and .30% to the processor on a qualified transaction for a total of 1.88%.

The nice thing about this model is that the merchant always knows the markup regardless of the card type being swiped.

For example:

* a qualified card cost is interchange for qualified card plus 30 basis points

* a rewards card cost is interchange for a rewards card plus 30 basis points

* a commercial card cost is interchange for a commercial card plus 30 basis points etc...

Interchange plus pricing is a step in the right direction for an industry that has been a victim of unscrupulous and deceitful practices for very long time. Now if we can just get rid of all the equipment leasing scams.

[b]Contact:[/b]
Kevin Sarisky
Merchant Solutions
Torrance, CA 90504

(424)212-9500
ksarisky@merchantsolutionsiq.com
http://merchantprocess.wordpress.com