Can Interchange Plus Pricing Credit Card Processing Rates Increase Over Time?
In Interchange plus credit card processing, a merchant's total cost for credit card processing is made up of three components: Interchange, Assessements, and Processing Services. Fees for Interchange and Assessments are set by the Visa, MasterCard, and Discover Card Associations, and are updated twice a year in April and October. The fee for Processing Services is set by a merchant's credit card processor / merchant service provider.
In April and October, when updates are made to Interchange and Assessments, these fees may go up or down, or new fee categories may be added or subtracted by Visa, MasterCard, or Discover. In Interchange plus pricing, since Interchange and Assessments are passed through to the merchant at cost, these updates will effect a merchant's total cost for credit card processing. If Interchange and Assessments go up, a merchant will pay more, if they go down, a merchant's cost will also go down along with them.
The fee for Processing Services will remain the same regardless of what happens with Interchange and Assessments.
For example, in April 2010, Visa altered the Interchange Rate for CPS/Debit from 1.03% + $0.15 to 0.95% + $0.20, and Assessments were increased to 0.11% + $0.0195 from 0.0925% + $0.0195.
With a Interchange Plus fee for Process Services of 0.10% + $0.10, a merchant's total cost would change from:
1.03% + $0.15 + 0.0925% + $0.0195 + 0.10% + $0.10 = 1.22% + $0.2695
0.95% + $0.20 + 0.11% + $0.0195 + 0.10% + $0.10 = 1.16% + $0.3195