Interchange Reimbursement: What You Need to Know About Your Most Costly Merchant Account Fee

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Interchange reimbursement fee

If you didn’t already know this, I’ll fill you in on a little secret. About 80% of your merchant account costs are coming from just one source, and that source is the interchange reimbursement fee.

I won’t get into too much detail about how the interchange reimbursement fee works, but if you’re feeling ambitious, there are plenty of online sources where you can learn more.

But, what are interchange fees anyway? In this article, I’ll be giving you the CliffsNotes version.

Interchange Reimbursement Fee
Interchange reimbursement is a set fee that the acquiring bank is charged by the issuing bank every time a credit card transaction, or “interchange” occurs between them. The fee is created and regulated by the credit card companies, Visa and MasterCard.

Both Visa and MasterCard have the ability to change those interchange rates twice a year in April and October.

Visa Interchange Rates (PDF)
MasterCard Interchange Rates (PDF)

Take a look at the above PDF docs and you’ll notice that there’re tens, if not hundreds, of different rate categories (tiers) for various types of credit card transactions (i.e., CPS/Automated Fuel Dispenser, Debit, CPS/Supermarket Debit—All Other, blah, blah, blah).

No need to waste your time trying to memorize all of them now, but in the future I’ll show you how to use them as a reference to lower your merchant account costs.

What you do need to know about interchange is the fact that every single transaction that occurs, whether on your website or in your store, falls into one of those rate tiers.

You will never know ahead of time which category your transactions will be charged under. That is up to the credit card company to decide.

Can you see the problem here? How are you supposed to compare merchant accounts based on rate if those rates are so dynamic? It becomes impossible.

In an effort to simplify this whole mess, the ISO/MSP’s of the world have created their own pricing structures:

Tiered-Pricing and Interchange-Plus.

If you’re looking to lower your current merchant account fees, I might be able to help. Click here to learn more.

Amad Ebrahimi
Amad has worked in the eCommerce and online marketing world since 2002. He started as an eBay seller, then slowly graduated to building & marketing his own websites and consulting others to do the same. He founded Merchant Maverick out of frustration with all the misinformation and shady tactics that he encountered when trying to find a merchant account for his and his client's businesses. He's the man behind most of the merchant account reviews, and articles posted on MerchantMaverick.com. Have any questions related to credit card processing? Talk to him.
Amad Ebrahimi
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2 Comments

    Eric Olson

    Great post. Interchange-plus is absolutely the way to go. That is why we only allow interchange-plus pricing in the credit card processing comparison shopping engine we built at TransFS.com. Here are two posts we have written about interchange-plus pricing that might be helpful to Merchant Maverick readers:

    What is interchange-plus: http://bit.ly/iXUZE

    Why you should want interchange-plus pricing: http://bit.ly/3emtIZ

    Enjoy!

    Cheers,
    Eric Olson
    Co-founder: TransFS.com

    The Merchant Maverick

    Eric thanks for the kind words, and the awesome articles. I can imagine that your services are much needed in this day and age. I still haven’t had a chance to take a look at TransFS in detail…work’s been extremely busy. But, I’ll definitely take some time in the very near future. 🙂

    Have a great weekend!

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