Are you a small business owner who accepts Visa, MasterCard, American Express, Discover and PIN-Debit?  Do you fully and completely understand your merchant account statement that you receive every month from your credit card processor?

It’s OK to say NO. In fact the truth is that 95% of merchants have no idea what they are even paying when they swipe that little piece of plastic through their out-dated terminal.  Why are the fees different on almost every transaction? Now even though I have been setting up merchant accounts since I was in my teens (6 years now), I still come across statements that take me 2-3 hours to figure out where all the fees are coming from.  Usually these statements are from LARGE financial institutions (cough, cough, bailout banks ) where the pricing for their merchant accounts has much profit built in through a complex matrix of fees and surcharges.

The point is that 95% of business owners across United States and probably the world do not FULLY understand their merchant account fees or how a merchant account works.  However, for those 5% of you merchants who have worked with an honest and hardworking MLS (Merchant Level Salesperson) like the owners of this blog, then you might just know a little bit about something they call Interchange.  If you understand Interchange as a business owner, you will save your company a lot of money.

Click Here for the VISA Interchange Charts

Click Here for the MasterCard Interchange Charts

What is Interchange Anyways?

If you are too lazy to check out the two links above, I will attempt to briefly explain this complex issuing bank reimbursement system know as Interchange (IE).  The majority of the “merchant processing fees” are being sent back to the issuing banks based upon what type of card it is (Debit? Credit? Rewards? Skymiles? Business?) and how the credit card is being taken (Swiped through a terminal? Keyed into a Machine or online terminal? Taken over the phone?).   These factors combined determine which categories of interchange the transaction falls into and therefore how much the issuing bank gets reimbursed.  Visa and MassterCard takes dues and assessments above the interchange fees and then banks and credit card processors markup the rates using a “Interchange Plus” fee schedule or more often (and more profitable for the merchant company) a 3-4 tiered pricing structure.

Get Interchange Plus Pricing Structure and You WILL Understand Your Merchant Statement!

If you look at your merchant account statement and you only see a few different discount rates*, then you are probably on a 3-tier or 4-tier fee schedule, and in that case, you are definitely overpaying on many of the cards that you take.  The reason you are overpaying is because  hundreds of different interchange categories (ranging from .60% up to 2.95% ) are being forced into only 3 or 4 tiers.  Think of an interchange plus pricing structure as taking the 3 or 4-tiers and breaking them apart into hundreds of tiers whereby you are passed on the actual costs of the different cards you take.  I have witnessed some merchants paying 4%, 5%, 6% and higher on their transactions that are placed into “non-qualified” or “mid-qualified” pricing tiers.  If you take a look at the Interchange charts, you will find that the even the most non-qualified transaction is less than 3%.  Focus on having an Interchange Plus pricing structure and a transparent merchant company to work with.

For a explanation of terms regarding your merchant account please visit our Merchant Account Glossary or feel free to fax us a copy of your most recent merchant statements to 949-544-0231 Attn: Merchant Juice or email statements@merchantjuice.com!

You can also send ALL of your questions to teachme@merchantjuice.com!

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