interchange 101
Post on 19-Oct-2014
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Learn why it isn’t about the rates.TRANSCRIPT
Your Payment Professionals
Payment Processing, Inc.I have a great rate… NOT!
Your Payment Professionals
Payment Processing, Inc.
I have a great rate… NOT!
Issuers
Cardholder
Merchant
Issuing Side Acquiring Side
HOST - Front-End,
Processor
HOST - Back-End, Processor
Merchant’s Local Bank
PPDirect
Transaction Process
Cost of Processing
Interchange
Monthly Service Fee
Authorization Fee(s)
Interchange
Four Contributing Interchange Factors:
1. The type of card used for purchase.
2. The way the transaction was handled.
3. The type of business accepting the card.
4. The amount of the sale/purchase.
There are 250 Interchange Rates
Interchange
Interchange CAN AND WILL
be anywhere between
0.00% - 3.10%
THIS DOES NOT MATTER!!!
Interchange• Example• How much will a
transaction cost if I run a $1,000.00 ticket?
• What information do we need to answer this correctly?
Interchange
1. What type of Business?
Utility Company
New Car Dealer
Petro Restaurant
Interchange
2. What type of Card?
Consumer Card Rewards Card
Corporate CardCheck Card
Interchange
3. Swiped or Keyed in Transaction
Interchange
Discount Rate
Discount Per Item
Dues & Assessments
% of total dollar amount of settled sale with no maximum or minimum limits imposed
Fixed item fee regardless of amount of sale, but can vary by interchange category
Small % of total dollar amount of settled sale that goes directly to Visa & MasterCard
$0.00 - $35.00
.0925% - .0950%
0.00% - 3.10%
The Only “Rate” That Matters
The only rate that matters is the effective rate of accepting cards.
Total Fees / V,MC Sales = Effective Rate
This is the “rate” that tells the entire story!!!
The “Rate” That Matters
$135,674 V,MC Sales & $2,794 Fees
$97,354 V,MC Sales & $1,974 Fees
$42,962 V,MC Sales & $1,346 Fees
$64,397 V,MC Sales & $1,642 Fees
2.06%
2.03%
3.13%
2.55%
Types of StatementsTiered
1.75% 2.50% 3.21%
Qualified Mid -Qualified
Non -Qualified
Types of StatementsSurcharge
Hamburger Menu Price = $2.50
• Bun = $1.50• FF = $2.00• Cheese = $3.00• Ketchup =$1.00• Lettuce = $1.00• Tomato = $1.00• Plate = $1.25• Napkin = $0.50• Pickle = $1.00
Actual price = $14.75
Interchange
TechnologyOur terminal level software is
programmed to automatically seek and identify the best possible level of interchange for each specific transaction and assign it appropriately.
The PPI Difference….