Understanding Interchange Rates – Shops & Businesses


Interchange fees or rates are determined and set by the issuing bank. The issuing bank is the bank that distributes or offers the branded credit card (Visa, MasterCard, etc.) to the consumer. The interchange rate, which is the bulk of the fees Merchants pay for accepting credit cards, will vary depending on several factors. These include but are not limited to risk level, transaction amount, and how the card is accepted (swiped or keyed). In short, the riskier the transaction, the higher the rate will be.

This predetermined interchange rate is the basic cost that all processing companies work with, mark up accordingly and then charge to the merchant. Processors will either bill their Merchants on a tiered setup or an Interchange plus setup. Tiered billing consists of categorizing the merchant’s credit card transactions into 3 or more categories. The basic categories are, qualified, mid-qualified and nonqualified. From there, processing companies will mark up the interchange rate an average of 30 to 80 basis points and also mark up the transaction fees. Other fees, such as monthly statement fees and batch fees, are also quite standard. Interchange plus billing is a little different. The processor will pass on the actual interchange rate established by the issuing bank and then charge a separate fee or rate. This allows the merchant to have some transparency in what the real costs are and this usually results in a more cost-effective solution for the Merchant. Beware of the flat rate scam, this is a deceitful practice often used by local agents or sales reps where a flat rate is offered without the mention of interchange being added. As an example, you may be offered a flat rate of 1.20%, when in actuality this is in addition to the interchange cost.

Sekure Payment Experts offers both, tiered and Interchange plus. Sekure prefers to offer an “apples to apples” comparison and will work with whichever set up the potential client is currently on. Sekure always offers very close to cost rates so whether you’re on a tiered or interchange plus, you can rest assured that we will find you the best deal out there. In keeping with our philosophy of transparency, we will openly share that Sekure has had only one complaint with the BBB (Better Business Bureau) which was successfully resolved, thus giving us an “A” rating. 

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