Understanding Interchange Plus

• What are Interchange Fees?

• Average Interchange Rates

• Visa Interchange Fees

• Mastercard Interchange Fees

• Discover Interchange Fees

• American Express Interchange Fees

DEFINING INTERCHANGE PLUS:

Interchange plus is the term used to describe a merchant account pricing model where a fixed markup is applied directly to interchange fees published by Visa, Mastercard, and Discover.

These interchange plus fees are the additional percentage plus of the interchange plus that is added into the total fee of the transaction.

HOW INTERCHANGE PLUS WORKS:

Interchange plus pricing works much like the name implies – by applying a fixed markup to Visa, Mastercard or Discover’s interchange fees.

Interchange plus fees are calculated as a percentage plus an additional fixed amount per transaction (for example, transaction fees: 0.25% + 20¢).

When helping a merchant to reconcile, please note that any extra you see is the interchange plus calculated into the total transaction fee.

THE INTERCHANGE PLUS FEE MODEL:

Non-transactional fees are Network Fees and Assessments, which are part of interchange. Interchange fees are made up of three different buckets. 

1. The Interchange level for the specific card type
2. Network Fees from the appropriate network the card was processed through
3. Assessments from the specific card brand like Visa, Mastercard, Discover and American Express

All three of these non-transaction fees are included in our Interchange Plus program and are passed directly to the merchant – this is no different than any other merchant processor. 

Some key factors that go into the Interchange Plus fees calculation are:

• Network - Visa, Mastercard, Discover and American Express
• Card Type - debit card or credit card
• Method of Payment - card present (swipe, dip, or tap) or card-not-present (online bookings, auto manual entries) 
• Merchant Category Code (MCC) - Type of business and how they are coded to accept payments (during underwriting process)
  • This code also affects the interchange rate as those businesses considered to be higher risk, such as travel, can come with higher interchange fees.

WAYS TO IDENTIFY IF AN ACCOUNT IS INTERCHANGE PLUS:

Typically, a merchant is interchange plus if their rate is less that 2.0%. Anything higher is usually a flat rate.

DIFFERENCE BETWEEN CARD BRAND FEES AND INTERCHANGE FEES:

Interchange and card brand network fees are different fees. The card brand fees will be based on the card brand associations like Visa, Mastercard, Discover and American Express. These card brands charge for their services every time a business takes a credit card payment.

Card brand network fees are typically charged monthly for the previous month. 

More info on interchange fee rates: https://www.valuepenguin.com/credit-card-processing/interchange-fees