What is the Interchange in Interchange Plus Credit Card Processing?
In Interchange Plus credit card processing, the term Interchange refers specifically to the credit and debit card interchange rates or interchange fees set by the Card Associations: Visa, MasterCard, and Discover.
Visa, MasterCard, and Discover set, and update or modify up to twice a year in April and October, the merchant interchange rates that are collected by the Acquiring banks that process credit and debit card transaction, and then paid to the Issuing banks that issue Visa, MasterCard, and Discover credit and debit cards. Interchange rates vary widely, depending on the card brand and type of card used in the transaction, the time between authorization and settlement, and the type of data included in the credit or debit card transaction string. In general, debit and non-rewards credit cards carry lower interchange rates, and rewards and commercial or purchasing credit cards carry higher interchange fees.
More generally, in interchange plus credit card processing pricing programs, the term interchange is often used to refer to the Acquiring bank's base or actual cost to process credit and debit card transactions. However, Interchange is not the only cost to a credit card processor. Merchant service providers must also collect Dues and Assessments on behalf the Visa, MasterCard, and Discover Card Associations. Dues and Assessments are paid directly to the Card Associations for the use of the Card Brand, and the ability to process credit and debit card transactions on the three payment networks.
Thus, interchange plus credit card processing or interchange plus pricing could more accurately be described as Dues and Assements and Interchange Plus credit card processing or Assessments and Interchange Plus pricing.
Besides being an awkardly long name, the term Interchange Plus is often used instead because many tiered pricing programs break out and pass on Dues and Assessments, but include Interchange Fees in the various tiers. So a merchant may have a tiered pricing program that shows and passes on Dues and Assessments but not Interchange, or they may have a tiered pricing program where both Interchange and Assessments are covered by the tiers.
Burlington Bank Card strives to provide our merchants with secure and reliable interchange plus merchant payment processing, transparent pricing, and one-on-one personal service.