| There's a pretty steep learning curve when it | | | | plus or enhanced recover reduced (ERR). They all |
| comes to credit card processing. Much of the | | | | use the same interchange fees as a basis for |
| confusion comes from elaborate merchant | | | | charges. |
| account pricing models built to maximize profits | | | | How the different pricing models act upon the |
| and increase merchant retention through fees | | | | underlying interchange fee is what makes them |
| that are more expensive than they seem. All of | | | | more or less expensive and also more or less |
| these pricing models are based on interchange - | | | | transparent to the merchant. Let's take a look at |
| understand interchange, and you're well on your | | | | tiered pricing for example. A tiered pricing model |
| way to saving a lot on credit card processing | | | | functions by reducing all of the interchange fees |
| fees. | | | | down to just a few categories. The lowest rate |
| The easiest way to interpret interchange is as the | | | | on a tiered merchant account referred to as the |
| wholesale rate and fee that a business pays to | | | | qualified rate is what's known as a lost leader in |
| accept credit cards. Interchange fees are set by | | | | the industry. |
| stakeholders of Visa and MasterCard and they're | | | | Through sales tactics and conditioning, merchants |
| updated twice a year in April and October. | | | | have been trained to concentrate on getting the |
| Interchange fee schedules are readily available | | | | lowest qualified rate when in fact most of their |
| from Visa and MasterCard's respective websites - | | | | transactions are going to be charged at the higher |
| but before you go checking them out, know that | | | | mid and non-qualified rate categories. ERR is similar |
| there are a couple hundred interchange categories | | | | to tiered pricing in the way that is has hidden |
| between the card associations. | | | | consequences, only the actual charges on an ERR |
| The sheer number of fees is intimidating, but it | | | | pricing model can be even harder to determine. |
| doesn't have to be. In fact, many interchange | | | | That's where interchange plus pricing enters the |
| fees are for specific business types or businesses | | | | picture. The interchange plus pricing model |
| with a specific processing profile. Typical | | | | functions just as the name implies. Instead of |
| merchants don't have to worry about these | | | | packing interchange fees into a few categories, |
| categories. | | | | interchange plus adds a pre-determined |
| You don't need to memorize the interchange fee | | | | percentage to every transaction. |
| schedules, just understand that interchange fees | | | | Interchange is a complex topic, but you don't |
| are the basis for all merchant account pricing | | | | need to be an expert to understand basically how |
| models. It doesn't matter if your merchant | | | | it directly affects the money that your business |
| account has a tiered pricing model, interchange | | | | pays in processing expenses. |