Let’s Break Interchange Down A Little…
We get a lot of confused looks when we sit down with folks and discuss why we prefer an Interchange Plus pricing model.
So we figured it might be time for us to post a little explanation for you all. We’ll try to make it short and sweet.
We’re pretty confident that most of you, at some point in time, have heard the saying, “Ante Up” when playing cards, right? If not, let’s set a time to meet up after work, and we’ll play a few hands of 5 Card Draw! (Can you tell we like Poker….we’re even more fond of Hold ‘Em!)
Basically, what Interchange boils down to is, it’s your “Pay To Play“… Your “Ante” if you will. In order to be in the processing game, you have to #AnteUp.
It breaks our hearts that we can’t do too much about Interchange. In fact, we can’t really do anything about it, because we, as your Merchant Service Providers (MSP‘s), don’t have anything to do with setting those rates.
If we were to break it down into its simplest form, Interchange = A fee paid between banks for the transactions of Credit and/or Debit cards. They are set by the credit card networks and they ultimately make up the bulk of your monthly fees.
Again…we’re sad that we can’t really do anything about that. But what we CAN do is provide you with transparent pricing. That’s why we prefer to set our clients up with the Interchange Plus pricing model. It is EXACTLY what it sounds like… Interchange…the fee paid between banks for processing card transactions…PLUS…our margin.
We try to be as simple and as transparent as possible. When we set up our clients with Interchange Plus, the only variable that changes on your fees is the Interchange Rate, which is based on the card type used by your customers. You’ll ALWAYS know exactly what you’re paying us, as your MSP, in fees.
Hopefully, this makes understanding Interchange a bit easier. If it wasn’t clear enough, or if you’d like to discuss it in more detail, please reach out to us. We’re happy to walk through it with anybody that asks. And if you’d like to understand how Interchange Plus pricing differs from a Blended Pricing model or a Tiered Pricing model, don’t hesitate to ask. We’re here for you!